Correlation Between Extra Space and First Industrial
Can any of the company-specific risk be diversified away by investing in both Extra Space and First Industrial 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 First Industrial 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 First Industrial Realty, you can compare the effects of market volatilities on Extra Space and First Industrial 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 First Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Extra Space and First Industrial.
Diversification Opportunities for Extra Space and First Industrial
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Extra and First is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Extra Space Storage and First Industrial Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Industrial Realty 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 First Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Industrial Realty has no effect on the direction of Extra Space i.e., Extra Space and First Industrial go up and down completely randomly.
Pair Corralation between Extra Space and First Industrial
Considering the 90-day investment horizon Extra Space Storage is expected to generate 1.15 times more return on investment than First Industrial. However, Extra Space is 1.15 times more volatile than First Industrial Realty. It trades about -0.09 of its potential returns per unit of risk. First Industrial Realty is currently generating about -0.26 per unit of risk. If you would invest 14,046 in Extra Space Storage on January 26, 2024 and sell it today you would lose (582.00) from holding Extra Space Storage or give up 4.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Extra Space Storage vs. First Industrial Realty
Performance |
| Timeline |
| Extra Space Storage |
| First Industrial Realty |
Extra Space and First Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Extra Space and First Industrial
The main advantage of trading using opposite Extra Space and First Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Extra Space position performs unexpectedly, First Industrial 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 First Industrial will offset losses from the drop in First Industrial's long position.| Extra Space vs. CubeSmart | Extra Space vs. National Storage Affiliates | Extra Space vs. Public Storage | Extra Space vs. EastGroup Properties |
| First Industrial vs. LXP Industrial Trust | First Industrial vs. Plymouth Industrial REIT | First Industrial vs. Global Self Storage | First Industrial vs. Terreno Realty |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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