Correlation Between W P and Extra Space

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

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

Diversification Opportunities for W P and Extra Space

-0.27

Correlation Coefficient

W P  Extra Space

Very good diversification

The 3 months correlation between WPC and Extra is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding W P Carey 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 W P 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 W P Carey 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 W P i.e., W P and Extra Space go up and down completely randomly.

Pair Corralation between W P and Extra Space

Considering the 90-day investment horizon W P Carey is expected to generate 0.6 times more return on investment than Extra Space. However, W P Carey is 1.66 times less risky than Extra Space. It trades about 0.14 of its potential returns per unit of risk. Extra Space Storage is currently generating about -0.06 per unit of risk. If you would invest  6,014  in W P Carey on May 12, 2025 and sell it today you would earn a total of  574.00  from holding W P Carey or generate 9.54% return on investment over 90 days.

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

W P Carey  vs.  Extra Space Storage

W P Carey

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in W P Carey are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, W P may actually be approaching a critical reversion point that can send shares even higher in September 2025.

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 latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with W P and Extra Space

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

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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..