Correlation Between Extra Space and Centaur Media

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

Diversification Opportunities for Extra Space and Centaur Media

0.37

Correlation Coefficient

Extra Space  Centaur Media

Weak diversification

The 3 months correlation between Extra and Centaur is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Extra Space Storage and Centaur Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centaur Media 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 Centaur Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centaur Media has no effect on the direction of Extra Space i.e., Extra Space and Centaur Media go up and down completely randomly.

Pair Corralation between Extra Space and Centaur Media

Assuming the 90 days trading horizon Extra Space Storage is expected to under-perform the Centaur Media. In addition to that, Extra Space is 1.22 times more volatile than Centaur Media. It trades about -0.12 of its total potential returns per unit of risk. Centaur Media is currently generating about -0.02 per unit of volatility. If you would invest  2,400  in Centaur Media on October 11, 2024 and sell it today you would lose (50.00) from holding Centaur Media or give up 2.08% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Extra Space Storage  vs.  Centaur Media

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. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Centaur Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Centaur Media has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Centaur Media is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Extra Space and Centaur Media

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

The idea behind Extra Space Storage and Centaur Media 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.