Correlation Between Extra Space and OSX Brasil

Can any of the company-specific risk be diversified away by investing in both Extra Space and OSX Brasil at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Extra Space and OSX Brasil into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Extra Space Storage and OSX Brasil SA, you can compare the effects of market volatilities on Extra Space and OSX Brasil and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Extra Space with a short position of OSX Brasil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Extra Space and OSX Brasil.

Diversification Opportunities for Extra Space and OSX Brasil

-0.77

Correlation Coefficient

Extra Space  OSX Brasil

Pay attention - limited upside

The 3 months correlation between Extra and OSX is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Extra Space Storage and OSX Brasil SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OSX Brasil SA and Extra Space is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Extra Space Storage are associated (or correlated) with OSX Brasil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OSX Brasil SA has no effect on the direction of Extra Space i.e., Extra Space and OSX Brasil go up and down completely randomly.

Pair Corralation between Extra Space and OSX Brasil

Assuming the 90 days trading horizon Extra Space Storage is expected to generate 1.07 times more return on investment than OSX Brasil. However, Extra Space is 1.07 times more volatile than OSX Brasil SA. It trades about 0.09 of its potential returns per unit of risk. OSX Brasil SA is currently generating about -0.43 per unit of risk. If you would invest  23,376  in Extra Space Storage on September 13, 2024 and sell it today you would earn a total of  1,072  from holding Extra Space Storage or generate 4.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Extra Space Storage  vs.  OSX Brasil SA

Extra Space Storage

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Extra Space Storage has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Extra Space is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

OSX Brasil SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days OSX Brasil SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, OSX Brasil is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Extra Space and OSX Brasil

The main advantage of trading using opposite Extra Space and OSX Brasil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Extra Space position performs unexpectedly, OSX Brasil can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in OSX Brasil will offset losses from the drop in OSX Brasil's long position.

The idea behind Extra Space Storage and OSX Brasil SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Stocks Directory module to find actively traded stocks across global markets.