Correlation Between Extra Space and Anglo Asian

Can any of the company-specific risk be diversified away by investing in both Extra Space and Anglo Asian 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 Anglo Asian 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 Anglo Asian Mining, you can compare the effects of market volatilities on Extra Space and Anglo Asian 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 Anglo Asian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Extra Space and Anglo Asian.

Diversification Opportunities for Extra Space and Anglo Asian

-0.08

Correlation Coefficient

Extra Space  Anglo Asian

Good diversification

The 3 months correlation between Extra and Anglo is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Extra Space Storage and Anglo Asian Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anglo Asian Mining 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 Anglo Asian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anglo Asian Mining has no effect on the direction of Extra Space i.e., Extra Space and Anglo Asian go up and down completely randomly.

Pair Corralation between Extra Space and Anglo Asian

Assuming the 90 days trading horizon Extra Space is expected to generate 34.09 times less return on investment than Anglo Asian. But when comparing it to its historical volatility, Extra Space Storage is 2.41 times less risky than Anglo Asian. It trades about 0.01 of its potential returns per unit of risk. Anglo Asian Mining is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  10,400  in Anglo Asian Mining on December 30, 2024 and sell it today you would earn a total of  2,600  from holding Anglo Asian Mining or generate 25.0% return on investment over 90 days.

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

Extra Space Storage  vs.  Anglo Asian Mining

Extra Space Storage

Risk-Adjusted Performance

Very Weak

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

Anglo Asian Mining

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Anglo Asian Mining are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Anglo Asian exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Extra Space and Anglo Asian

The main advantage of trading using opposite Extra Space and Anglo Asian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Extra Space position performs unexpectedly, Anglo Asian 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 Anglo Asian will offset losses from the drop in Anglo Asian's long position.

The idea behind Extra Space Storage and Anglo Asian Mining 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.

Check out your portfolio center.

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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.