Correlation Between Extra Space and Douglas Emmett

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

Diversification Opportunities for Extra Space and Douglas Emmett

0.37

Correlation Coefficient

Extra Space  Douglas Emmett

Weak diversification

The 3 months correlation between Extra and Douglas is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Extra Space Storage and Douglas Emmett in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Douglas Emmett 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 Douglas Emmett. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Douglas Emmett has no effect on the direction of Extra Space i.e., Extra Space and Douglas Emmett go up and down completely randomly.

Pair Corralation between Extra Space and Douglas Emmett

Considering the 90-day investment horizon Extra Space Storage is expected to under-perform the Douglas Emmett. In addition to that, Extra Space is 1.06 times more volatile than Douglas Emmett. It trades about -0.05 of its total potential returns per unit of risk. Douglas Emmett is currently generating about 0.02 per unit of volatility. If you would invest  1,432  in Douglas Emmett on May 14, 2025 and sell it today you would earn a total of  25.00  from holding Douglas Emmett or generate 1.75% return on investment over 90 days.

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

Extra Space Storage  vs.  Douglas Emmett

Extra Space Storage

Risk-Adjusted Performance

Weakest

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

Douglas Emmett

Risk-Adjusted Performance

Weakest

Compared to the overall equity markets, risk-adjusted returns on investments in Douglas Emmett are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical and fundamental indicators, Douglas Emmett is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Extra Space and Douglas Emmett

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

The idea behind Extra Space Storage and Douglas Emmett 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 AI Portfolio Prophet module to use AI to generate optimal portfolios and find profitable investment opportunities.