Correlation Between Alexandria Real and Innovative Industrial
Can any of the company-specific risk be diversified away by investing in both Alexandria Real and Innovative 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 Alexandria Real and Innovative Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alexandria Real Estate and Innovative Industrial Properties, you can compare the effects of market volatilities on Alexandria Real and Innovative 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 Alexandria Real with a short position of Innovative Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alexandria Real and Innovative Industrial.
Diversification Opportunities for Alexandria Real and Innovative Industrial
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Alexandria and Innovative is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Alexandria Real Estate and Innovative Industrial Properti in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovative Industrial and Alexandria Real 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 Alexandria Real Estate are associated (or correlated) with Innovative Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovative Industrial has no effect on the direction of Alexandria Real i.e., Alexandria Real and Innovative Industrial go up and down completely randomly.
Pair Corralation between Alexandria Real and Innovative Industrial
Considering the 90-day investment horizon Alexandria Real Estate is expected to under-perform the Innovative Industrial. But the stock apears to be less risky and, when comparing its historical volatility, Alexandria Real Estate is 1.14 times less risky than Innovative Industrial. The stock trades about -0.02 of its potential returns per unit of risk. The Innovative Industrial Properties is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 9,654 in Innovative Industrial Properties on September 3, 2024 and sell it today you would earn a total of 1,248 from holding Innovative Industrial Properties or generate 12.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alexandria Real Estate vs. Innovative Industrial Properti
Performance |
| Timeline |
| Alexandria Real Estate |
| Innovative Industrial |
Alexandria Real and Innovative Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alexandria Real and Innovative Industrial
The main advantage of trading using opposite Alexandria Real and Innovative Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alexandria Real position performs unexpectedly, Innovative 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 Innovative Industrial will offset losses from the drop in Innovative Industrial's long position.| Alexandria Real vs. Office Properties Income | Alexandria Real vs. SL Green Realty | Alexandria Real vs. Cousins Properties Incorporated | Alexandria Real vs. Highwoods Properties |
| Innovative Industrial vs. Prologis | Innovative Industrial vs. Public Storage | Innovative Industrial vs. Extra Space Storage | Innovative Industrial vs. CubeSmart |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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