Correlation Between First Industrial and REXFORD INDREALTY
Can any of the company-specific risk be diversified away by investing in both First Industrial and REXFORD INDREALTY 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 First Industrial and REXFORD INDREALTY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Industrial Realty and REXFORD INDREALTY DL 01, you can compare the effects of market volatilities on First Industrial and REXFORD INDREALTY 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 First Industrial with a short position of REXFORD INDREALTY. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Industrial and REXFORD INDREALTY.
Diversification Opportunities for First Industrial and REXFORD INDREALTY
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between First and REXFORD is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding First Industrial Realty and REXFORD INDREALTY DL 01 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REXFORD INDREALTY and First Industrial 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 First Industrial Realty are associated (or correlated) with REXFORD INDREALTY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REXFORD INDREALTY has no effect on the direction of First Industrial i.e., First Industrial and REXFORD INDREALTY go up and down completely randomly.
Pair Corralation between First Industrial and REXFORD INDREALTY
Assuming the 90 days horizon First Industrial Realty is expected to generate 0.89 times more return on investment than REXFORD INDREALTY. However, First Industrial Realty is 1.13 times less risky than REXFORD INDREALTY. It trades about -0.06 of its potential returns per unit of risk. REXFORD INDREALTY DL 01 is currently generating about -0.06 per unit of risk. If you would invest 5,050 in First Industrial Realty on September 14, 2024 and sell it today you would lose (90.00) from holding First Industrial Realty or give up 1.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Industrial Realty vs. REXFORD INDREALTY DL 01
Performance |
| Timeline |
| First Industrial Realty |
| REXFORD INDREALTY |
First Industrial and REXFORD INDREALTY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Industrial and REXFORD INDREALTY
The main advantage of trading using opposite First Industrial and REXFORD INDREALTY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Industrial position performs unexpectedly, REXFORD INDREALTY 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 REXFORD INDREALTY will offset losses from the drop in REXFORD INDREALTY's long position.| First Industrial vs. Extra Space Storage | First Industrial vs. REXFORD INDREALTY DL 01 | First Industrial vs. CubeSmart | First Industrial vs. Warehouses De Pauw |
| REXFORD INDREALTY vs. Extra Space Storage | REXFORD INDREALTY vs. CubeSmart | REXFORD INDREALTY vs. First Industrial Realty | REXFORD INDREALTY vs. Warehouses De Pauw |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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