Correlation Between Creo Medical and Extra Space

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

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

Diversification Opportunities for Creo Medical and Extra Space

-0.02

Correlation Coefficient

Creo Medical  Extra Space

Good diversification

The 3 months correlation between Creo and Extra is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Creo Medical Group 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 Creo Medical 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 Creo Medical Group 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 Creo Medical i.e., Creo Medical and Extra Space go up and down completely randomly.

Pair Corralation between Creo Medical and Extra Space

Assuming the 90 days trading horizon Creo Medical Group is expected to under-perform the Extra Space. In addition to that, Creo Medical is 1.98 times more volatile than Extra Space Storage. It trades about -0.21 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  14,595  in Extra Space Storage on December 23, 2024 and sell it today you would lose (114.00) from holding Extra Space Storage or give up 0.78% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Creo Medical Group  vs.  Extra Space Storage

Creo Medical Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Creo Medical Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private 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. 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.

Pair Trading with Creo Medical and Extra Space

The main advantage of trading using opposite Creo Medical and Extra Space positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Creo Medical 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 Creo Medical Group 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.