Correlation Between CTO Realty and Extra Space

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

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

Diversification Opportunities for CTO Realty and Extra Space

0.18

Correlation Coefficient

CTO Realty  Extra Space

Average diversification

The 3 months correlation between CTO and Extra is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding CTO Realty Growth 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 CTO Realty 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 CTO Realty Growth 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 CTO Realty i.e., CTO Realty and Extra Space go up and down completely randomly.

Pair Corralation between CTO Realty and Extra Space

Considering the 90-day investment horizon CTO Realty Growth is expected to under-perform the Extra Space. In addition to that, CTO Realty is 1.15 times more volatile than Extra Space Storage. It trades about -0.12 of its total potential returns per unit of risk. Extra Space Storage is currently generating about -0.04 per unit of volatility. If you would invest  15,600  in Extra Space Storage on November 28, 2024 and sell it today you would lose (209.00) from holding Extra Space Storage or give up 1.34% of portfolio value over 90 days.

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

CTO Realty Growth  vs.  Extra Space Storage

CTO Realty Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days CTO Realty Growth 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 healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm 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 latest unsteady performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with CTO Realty and Extra Space

The main advantage of trading using opposite CTO Realty and Extra Space positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CTO Realty 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 CTO Realty Growth 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.