Correlation Between Extra Space and SmartStop Self

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

Diversification Opportunities for Extra Space and SmartStop Self

-0.57

Correlation Coefficient

Extra Space  SmartStop Self

Excellent diversification

The 3 months correlation between Extra and SmartStop is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Extra Space Storage and SmartStop Self Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SmartStop 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 SmartStop Self. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SmartStop Self Storage has no effect on the direction of Extra Space i.e., Extra Space and SmartStop Self go up and down completely randomly.

Pair Corralation between Extra Space and SmartStop Self

Considering the 90-day investment horizon Extra Space is expected to generate 6.58 times less return on investment than SmartStop Self. But when comparing it to its historical volatility, Extra Space Storage is 2.16 times less risky than SmartStop Self. It trades about 0.1 of its potential returns per unit of risk. SmartStop Self Storage is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  900.00  in SmartStop Self Storage on October 24, 2024 and sell it today you would earn a total of  135.00  from holding SmartStop Self Storage or generate 15.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	85.71%
Values	Daily Returns

Extra Space Storage  vs.  SmartStop Self Storage

Extra Space Storage

Risk-Adjusted Performance

0 of 100

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.

SmartStop Self Storage

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SmartStop Self Storage are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain technical and fundamental indicators, SmartStop Self reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Extra Space and SmartStop Self

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

The idea behind Extra Space Storage and SmartStop 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.