Correlation Between Broadstone Net and Extra Space

Can any of the company-specific risk be diversified away by investing in both Broadstone Net and Extra Space 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 Broadstone Net and Extra Space into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Broadstone Net Lease and Extra Space Storage, you can compare the effects of market volatilities on Broadstone Net and Extra Space 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 Broadstone Net with a short position of Extra Space. Check out your portfolio center. Please also check ongoing floating volatility patterns of Broadstone Net and Extra Space.

Diversification Opportunities for Broadstone Net and Extra Space

-0.22

Correlation Coefficient

Broadstone Net  Extra Space

Very good diversification

The 3 months correlation between Broadstone and Extra is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Broadstone Net Lease and Extra Space Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Extra Space Storage and Broadstone Net 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 Broadstone Net Lease are associated (or correlated) with Extra Space. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Extra Space Storage has no effect on the direction of Broadstone Net i.e., Broadstone Net and Extra Space go up and down completely randomly.

Pair Corralation between Broadstone Net and Extra Space

Considering the 90-day investment horizon Broadstone Net Lease is expected to generate 0.98 times more return on investment than Extra Space. However, Broadstone Net Lease is 1.02 times less risky than Extra Space. It trades about 0.11 of its potential returns per unit of risk. Extra Space Storage is currently generating about 0.01 per unit of risk. If you would invest  1,564  in Broadstone Net Lease on December 29, 2024 and sell it today you would earn a total of  141.00  from holding Broadstone Net Lease or generate 9.02% return on investment over 90 days.

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

Broadstone Net Lease  vs.  Extra Space Storage

Broadstone Net Lease

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Broadstone Net Lease are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent basic indicators, Broadstone Net may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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. Even with relatively invariable basic indicators, Extra Space is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Broadstone Net and Extra Space

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

The idea behind Broadstone Net Lease and Extra Space Storage 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.