Correlation Between First Industrial and Global Net
Can any of the company-specific risk be diversified away by investing in both First Industrial and Global Net 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 Global Net 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 Global Net Lease, you can compare the effects of market volatilities on First Industrial and Global Net 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 Global Net. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Industrial and Global Net.
Diversification Opportunities for First Industrial and Global Net
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Global is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding First Industrial Realty and Global Net Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Net Lease 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 Global Net. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Net Lease has no effect on the direction of First Industrial i.e., First Industrial and Global Net go up and down completely randomly.
Pair Corralation between First Industrial and Global Net
Allowing for the 90-day total investment horizon First Industrial Realty is expected to generate 0.89 times more return on investment than Global Net. However, First Industrial Realty is 1.12 times less risky than Global Net. It trades about 0.22 of its potential returns per unit of risk. Global Net Lease is currently generating about 0.07 per unit of risk. If you would invest 5,000 in First Industrial Realty on October 28, 2024 and sell it today you would earn a total of 337.00 from holding First Industrial Realty or generate 6.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Industrial Realty vs. Global Net Lease
Performance |
| Timeline |
| First Industrial Realty |
| Global Net Lease |
First Industrial and Global Net Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Industrial and Global Net
The main advantage of trading using opposite First Industrial and Global Net positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Industrial position performs unexpectedly, Global Net 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 Global Net will offset losses from the drop in Global Net'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 |
| Global Net vs. Modiv Inc | Global Net vs. Precinct Properties New | Global Net vs. Global Net Lease | Global Net vs. NexPoint Diversified Real |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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