Correlation Between Elme Communities and First Industrial
Can any of the company-specific risk be diversified away by investing in both Elme Communities 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 Elme Communities and First Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elme Communities and First Industrial Realty, you can compare the effects of market volatilities on Elme Communities 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 Elme Communities with a short position of First Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elme Communities and First Industrial.
Diversification Opportunities for Elme Communities and First Industrial
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Elme and First is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Elme Communities 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 Elme Communities 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 Elme Communities 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 Elme Communities i.e., Elme Communities and First Industrial go up and down completely randomly.
Pair Corralation between Elme Communities and First Industrial
Given the investment horizon of 90 days Elme Communities is expected to generate 1.81 times less return on investment than First Industrial. In addition to that, Elme Communities is 1.0 times more volatile than First Industrial Realty. It trades about 0.07 of its total potential returns per unit of risk. First Industrial Realty is currently generating about 0.12 per unit of volatility. If you would invest 4,591 in First Industrial Realty on August 28, 2024 and sell it today you would earn a total of 856.00 from holding First Industrial Realty or generate 18.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elme Communities vs. First Industrial Realty
Performance |
| Timeline |
| Elme Communities |
| First Industrial Realty |
Elme Communities and First Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elme Communities and First Industrial
The main advantage of trading using opposite Elme Communities and First Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elme Communities 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.| Elme Communities vs. BRT Realty Trust | Elme Communities vs. Nexpoint Residential Trust | Elme Communities vs. Centerspace | Elme Communities vs. Veris Residential |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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