Correlation Between EPR Properties and Lexington Realty
Can any of the company-specific risk be diversified away by investing in both EPR Properties and Lexington Realty 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 EPR Properties and Lexington Realty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EPR Properties and Lexington Realty Trust, you can compare the effects of market volatilities on EPR Properties and Lexington Realty 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 EPR Properties with a short position of Lexington Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of EPR Properties and Lexington Realty.
Diversification Opportunities for EPR Properties and Lexington Realty
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between EPR and Lexington is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding EPR Properties and Lexington Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lexington Realty Trust and EPR Properties 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 EPR Properties are associated (or correlated) with Lexington Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lexington Realty Trust has no effect on the direction of EPR Properties i.e., EPR Properties and Lexington Realty go up and down completely randomly.
Pair Corralation between EPR Properties and Lexington Realty
Assuming the 90 days trading horizon EPR Properties is expected to generate 0.82 times more return on investment than Lexington Realty. However, EPR Properties is 1.23 times less risky than Lexington Realty. It trades about 0.01 of its potential returns per unit of risk. Lexington Realty Trust is currently generating about -0.12 per unit of risk. If you would invest 2,205 in EPR Properties on August 31, 2024 and sell it today you would earn a total of 3.00 from holding EPR Properties or generate 0.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
EPR Properties vs. Lexington Realty Trust
Performance |
| Timeline |
| EPR Properties |
| Lexington Realty Trust |
EPR Properties and Lexington Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EPR Properties and Lexington Realty
The main advantage of trading using opposite EPR Properties and Lexington Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EPR Properties position performs unexpectedly, Lexington Realty 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 Lexington Realty will offset losses from the drop in Lexington Realty's long position.| EPR Properties vs. Digital Realty Trust | EPR Properties vs. Digital Realty Trust | EPR Properties vs. Gladstone Land Corp | EPR Properties vs. EPR Properties |
| Lexington Realty vs. Prologis | Lexington Realty vs. Public Storage | Lexington Realty vs. LXP Industrial Trust | Lexington Realty vs. Plymouth Industrial REIT |
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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