Correlation Between First Industrial and Healthcare Realty
Can any of the company-specific risk be diversified away by investing in both First Industrial and Healthcare 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 First Industrial and Healthcare Realty 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 Healthcare Realty Trust, you can compare the effects of market volatilities on First Industrial and Healthcare 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 First Industrial with a short position of Healthcare Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Industrial and Healthcare Realty.
Diversification Opportunities for First Industrial and Healthcare Realty
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between First and Healthcare is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding First Industrial Realty and Healthcare Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Healthcare Realty Trust 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 Healthcare Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Healthcare Realty Trust has no effect on the direction of First Industrial i.e., First Industrial and Healthcare Realty go up and down completely randomly.
Pair Corralation between First Industrial and Healthcare Realty
Allowing for the 90-day total investment horizon First Industrial is expected to generate 8.68 times less return on investment than Healthcare Realty. But when comparing it to its historical volatility, First Industrial Realty is 1.83 times less risky than Healthcare Realty. It trades about 0.03 of its potential returns per unit of risk. Healthcare Realty Trust is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,761 in Healthcare Realty Trust on August 29, 2024 and sell it today you would earn a total of 94.00 from holding Healthcare Realty Trust or generate 5.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Industrial Realty vs. Healthcare Realty Trust
Performance |
| Timeline |
| First Industrial Realty |
| Healthcare Realty Trust |
First Industrial and Healthcare Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Industrial and Healthcare Realty
The main advantage of trading using opposite First Industrial and Healthcare Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Industrial position performs unexpectedly, Healthcare 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 Healthcare Realty will offset losses from the drop in Healthcare Realty'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 |
| Healthcare Realty vs. Healthpeak Properties | Healthcare Realty vs. Sabra Healthcare REIT | Healthcare Realty vs. Community Healthcare Trust | Healthcare Realty vs. Universal Health 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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