Correlation Between Extra Space and Hong Kong
Can any of the company-specific risk be diversified away by investing in both Extra Space and Hong Kong 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 Hong Kong 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 Hong Kong Land, you can compare the effects of market volatilities on Extra Space and Hong Kong 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 Hong Kong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Extra Space and Hong Kong.
Diversification Opportunities for Extra Space and Hong Kong
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Extra and Hong is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Extra Space Storage and Hong Kong Land in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hong Kong Land 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 Hong Kong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hong Kong Land has no effect on the direction of Extra Space i.e., Extra Space and Hong Kong go up and down completely randomly.
Pair Corralation between Extra Space and Hong Kong
Assuming the 90 days trading horizon Extra Space is expected to generate 3.14 times less return on investment than Hong Kong. In addition to that, Extra Space is 4.48 times more volatile than Hong Kong Land. It trades about 0.01 of its total potential returns per unit of risk. Hong Kong Land is currently generating about 0.12 per unit of volatility. If you would invest 724.00 in Hong Kong Land on December 30, 2024 and sell it today you would earn a total of 17.00 from holding Hong Kong Land or generate 2.35% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Extra Space Storage vs. Hong Kong Land
Performance |
Timeline |
Extra Space Storage |
Hong Kong Land |
Extra Space and Hong Kong Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Extra Space and Hong Kong
The main advantage of trading using opposite Extra Space and Hong Kong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Extra Space position performs unexpectedly, Hong Kong 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 Hong Kong will offset losses from the drop in Hong Kong's long position.Extra Space vs. Systemair AB | Extra Space vs. Norwegian Air Shuttle | Extra Space vs. Ryanair Holdings plc | Extra Space vs. Fair Oaks Income |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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