Correlation Between LESTE FDO and Extra Space

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

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

Diversification Opportunities for LESTE FDO and Extra Space

0.46

Correlation Coefficient

LESTE FDO  Extra Space

Very weak diversification

The 3 months correlation between LESTE and Extra is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding LESTE FDO INV 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 LESTE FDO 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 LESTE FDO INV 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 LESTE FDO i.e., LESTE FDO and Extra Space go up and down completely randomly.

Pair Corralation between LESTE FDO and Extra Space

Assuming the 90 days trading horizon LESTE FDO INV is expected to generate 0.63 times more return on investment than Extra Space. However, LESTE FDO INV is 1.59 times less risky than Extra Space. It trades about -0.03 of its potential returns per unit of risk. Extra Space Storage is currently generating about -0.11 per unit of risk. If you would invest  7,059  in LESTE FDO INV on December 2, 2024 and sell it today you would lose (259.00) from holding LESTE FDO INV or give up 3.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.77%
Values	Daily Returns

LESTE FDO INV  vs.  Extra Space Storage

LESTE FDO INV

Risk-Adjusted Performance

Very Weak

Over the last 90 days LESTE FDO INV has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, LESTE FDO is not utilizing all of its potentials. The current 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. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with LESTE FDO and Extra Space

The main advantage of trading using opposite LESTE FDO and Extra Space positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LESTE FDO 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 LESTE FDO INV 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.

Check out your portfolio center.

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 Money Managers module to screen money managers from public funds and ETFs managed around the world.