Correlation Between Xior Student and Shurgard Self

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

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

Diversification Opportunities for Xior Student and Shurgard Self

0.75

Correlation Coefficient

Xior Student  Shurgard Self

Poor diversification

The 3 months correlation between Xior and Shurgard is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Xior Student Housing and Shurgard Self Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shurgard Self Storage and Xior Student 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 Xior Student Housing are associated (or correlated) with Shurgard Self. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shurgard Self Storage has no effect on the direction of Xior Student i.e., Xior Student and Shurgard Self go up and down completely randomly.

Pair Corralation between Xior Student and Shurgard Self

Assuming the 90 days trading horizon Xior Student Housing is expected to generate 0.89 times more return on investment than Shurgard Self. However, Xior Student Housing is 1.12 times less risky than Shurgard Self. It trades about -0.03 of its potential returns per unit of risk. Shurgard Self Storage is currently generating about -0.03 per unit of risk. If you would invest  2,878  in Xior Student Housing on December 31, 2024 and sell it today you would lose (108.00) from holding Xior Student Housing or give up 3.75% of portfolio value over 90 days.

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

Xior Student Housing  vs.  Shurgard Self Storage

Xior Student Housing

Risk-Adjusted Performance

Very Weak

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

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.

Pair Trading with Xior Student and Shurgard Self

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

The idea behind Xior Student Housing and Shurgard 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.