Correlation Between First Industrial and Centerspace
Can any of the company-specific risk be diversified away by investing in both First Industrial and Centerspace 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 Centerspace 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 Centerspace, you can compare the effects of market volatilities on First Industrial and Centerspace 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 Centerspace. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Industrial and Centerspace.
Diversification Opportunities for First Industrial and Centerspace
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Centerspace is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding First Industrial Realty and Centerspace in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centerspace 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 Centerspace. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centerspace has no effect on the direction of First Industrial i.e., First Industrial and Centerspace go up and down completely randomly.
Pair Corralation between First Industrial and Centerspace
Allowing for the 90-day total investment horizon First Industrial Realty is expected to generate 0.8 times more return on investment than Centerspace. However, First Industrial Realty is 1.25 times less risky than Centerspace. It trades about -0.09 of its potential returns per unit of risk. Centerspace is currently generating about -0.13 per unit of risk. If you would invest 5,553 in First Industrial Realty on October 24, 2024 and sell it today you would lose (475.00) from holding First Industrial Realty or give up 8.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Industrial Realty vs. Centerspace
Performance |
| Timeline |
| First Industrial Realty |
| Centerspace |
First Industrial and Centerspace Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Industrial and Centerspace
The main advantage of trading using opposite First Industrial and Centerspace positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Industrial position performs unexpectedly, Centerspace 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 Centerspace will offset losses from the drop in Centerspace's long position.| First Industrial vs. Boston Properties | First Industrial vs. Douglas Emmett | First Industrial vs. Kilroy Realty Corp | First Industrial vs. Alexandria Real Estate |
| Centerspace vs. BRT Realty Trust | Centerspace vs. Nexpoint Residential Trust | Centerspace vs. Veris Residential | Centerspace vs. Clipper Realty |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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