Correlation Between First Industrial and American Healthcare
Can any of the company-specific risk be diversified away by investing in both First Industrial and American Healthcare 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 American Healthcare 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 American Healthcare REIT,, you can compare the effects of market volatilities on First Industrial and American Healthcare 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 American Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Industrial and American Healthcare.
Diversification Opportunities for First Industrial and American Healthcare
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between First and American is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding First Industrial Realty and American Healthcare REIT, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Healthcare REIT, 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 American Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Healthcare REIT, has no effect on the direction of First Industrial i.e., First Industrial and American Healthcare go up and down completely randomly.
Pair Corralation between First Industrial and American Healthcare
Allowing for the 90-day total investment horizon First Industrial is expected to generate 4.91 times less return on investment than American Healthcare. But when comparing it to its historical volatility, First Industrial Realty is 1.98 times less risky than American Healthcare. It trades about 0.1 of its potential returns per unit of risk. American Healthcare REIT, is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 2,636 in American Healthcare REIT, on August 30, 2024 and sell it today you would earn a total of 321.00 from holding American Healthcare REIT, or generate 12.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Industrial Realty vs. American Healthcare REIT,
Performance |
| Timeline |
| First Industrial Realty |
| American Healthcare REIT, |
First Industrial and American Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Industrial and American Healthcare
The main advantage of trading using opposite First Industrial and American Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Industrial position performs unexpectedly, American Healthcare 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 American Healthcare will offset losses from the drop in American Healthcare's long position.| First Industrial vs. LXP Industrial Trust | First Industrial vs. Plymouth Industrial REIT | First Industrial vs. Global Self Storage | First Industrial vs. Terreno Realty |
| American Healthcare vs. Boston Properties | American Healthcare vs. Douglas Emmett | American Healthcare vs. Kilroy Realty Corp | American Healthcare vs. Highwoods 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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