Correlation Between Shurgard Self and Nextensa

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

By analyzing existing cross correlation between Shurgard Self Storage and Nextensa NV, you can compare the effects of market volatilities on Shurgard Self and Nextensa 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 Shurgard Self with a short position of Nextensa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shurgard Self and Nextensa.

Diversification Opportunities for Shurgard Self and Nextensa

0.59

Correlation Coefficient

Shurgard Self  Nextensa

Very weak diversification

The 3 months correlation between Shurgard and Nextensa is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Shurgard Self Storage and Nextensa NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextensa NV and Shurgard Self 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 Shurgard Self Storage are associated (or correlated) with Nextensa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextensa NV has no effect on the direction of Shurgard Self i.e., Shurgard Self and Nextensa go up and down completely randomly.

Pair Corralation between Shurgard Self and Nextensa

Assuming the 90 days trading horizon Shurgard Self Storage is expected to generate 1.21 times more return on investment than Nextensa. However, Shurgard Self is 1.21 times more volatile than Nextensa NV. It trades about -0.03 of its potential returns per unit of risk. Nextensa NV is currently generating about -0.05 per unit of risk. If you would invest  3,570  in Shurgard Self Storage on December 30, 2024 and sell it today you would lose (140.00) from holding Shurgard Self Storage or give up 3.92% of portfolio value over 90 days.

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

Shurgard Self Storage  vs.  Nextensa NV

Shurgard Self Storage

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shurgard Self Storage has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Shurgard Self is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Nextensa NV

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nextensa NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Nextensa is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Shurgard Self and Nextensa

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

The idea behind Shurgard Self Storage and Nextensa NV 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.