Correlation Between CubeSmart and First Industrial
Can any of the company-specific risk be diversified away by investing in both CubeSmart 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 CubeSmart and First Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CubeSmart and First Industrial Realty, you can compare the effects of market volatilities on CubeSmart 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 CubeSmart with a short position of First Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of CubeSmart and First Industrial.
Diversification Opportunities for CubeSmart and First Industrial
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between CubeSmart and First is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding CubeSmart 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 CubeSmart 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 CubeSmart 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 CubeSmart i.e., CubeSmart and First Industrial go up and down completely randomly.
Pair Corralation between CubeSmart and First Industrial
Given the investment horizon of 90 days CubeSmart is expected to generate 1.12 times more return on investment than First Industrial. However, CubeSmart is 1.12 times more volatile than First Industrial Realty. It trades about 0.05 of its potential returns per unit of risk. First Industrial Realty is currently generating about 0.02 per unit of risk. If you would invest 4,039 in CubeSmart on August 26, 2024 and sell it today you would earn a total of 852.00 from holding CubeSmart or generate 21.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
CubeSmart vs. First Industrial Realty
Performance |
| Timeline |
| CubeSmart |
| First Industrial Realty |
CubeSmart and First Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CubeSmart and First Industrial
The main advantage of trading using opposite CubeSmart and First Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CubeSmart 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.| CubeSmart vs. Public Storage | CubeSmart vs. National Storage Affiliates | CubeSmart vs. Prologis | CubeSmart vs. Extra Space Storage |
| First Industrial vs. Boston Properties | First Industrial vs. Alexandria Real Estate | First Industrial vs. Highwoods Properties | First Industrial vs. Hudson Pacific Properties |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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