Correlation Between Extra Space and Global Self

Can any of the company-specific risk be diversified away by investing in both Extra Space and Global Self 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 Global Self 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 Global Self Storage, you can compare the effects of market volatilities on Extra Space and Global Self 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 Global Self. Check out your portfolio center. Please also check ongoing floating volatility patterns of Extra Space and Global Self.

Diversification Opportunities for Extra Space and Global Self

-0.25

Correlation Coefficient

Extra Space  Global Self

Very good diversification

The 3 months correlation between Extra and Global is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Extra Space Storage and Global Self Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Self Storage 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 Global Self. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Self Storage has no effect on the direction of Extra Space i.e., Extra Space and Global Self go up and down completely randomly.

Pair Corralation between Extra Space and Global Self

Considering the 90-day investment horizon Extra Space Storage is expected to under-perform the Global Self. In addition to that, Extra Space is 1.25 times more volatile than Global Self Storage. It trades about -0.1 of its total potential returns per unit of risk. Global Self Storage is currently generating about 0.06 per unit of volatility. If you would invest  500.00  in Global Self Storage on November 29, 2024 and sell it today you would earn a total of  19.00  from holding Global Self Storage or generate 3.8% return on investment over 90 days.

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

Extra Space Storage  vs.  Global Self Storage

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.

Global Self Storage

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Global Self Storage are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable essential indicators, Global Self is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Extra Space and Global Self

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

The idea behind Extra Space Storage and Global Self 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.