Correlation Between Brixmor Property and Extra Space

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

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

Diversification Opportunities for Brixmor Property and Extra Space

0.31

Correlation Coefficient

Brixmor Property  Extra Space

Weak diversification

The 3 months correlation between Brixmor and Extra is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Brixmor Property 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 Brixmor Property 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 Brixmor Property 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 Brixmor Property i.e., Brixmor Property and Extra Space go up and down completely randomly.

Pair Corralation between Brixmor Property and Extra Space

Considering the 90-day investment horizon Brixmor Property is expected to under-perform the Extra Space. In addition to that, Brixmor Property is 1.05 times more volatile than Extra Space Storage. It trades about -0.04 of its total potential returns per unit of risk. Extra Space Storage is currently generating about 0.0 per unit of volatility. If you would invest  14,560  in Extra Space Storage on December 28, 2024 and sell it today you would lose (41.00) from holding Extra Space Storage or give up 0.28% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Brixmor Property  vs.  Extra Space Storage

Brixmor Property

Risk-Adjusted Performance

Very Weak

Over the last 90 days Brixmor Property has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Brixmor Property is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

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 Brixmor Property and Extra Space

The main advantage of trading using opposite Brixmor Property and Extra Space positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brixmor Property 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 Brixmor Property 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.