Correlation Between First Industrial and LXP Industrial
Can any of the company-specific risk be diversified away by investing in both First Industrial and LXP Industrial 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 LXP Industrial 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 LXP Industrial Trust, you can compare the effects of market volatilities on First Industrial and LXP Industrial 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 LXP Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Industrial and LXP Industrial.
Diversification Opportunities for First Industrial and LXP Industrial
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between First and LXP is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding First Industrial Realty and LXP Industrial Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LXP Industrial 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 LXP Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LXP Industrial Trust has no effect on the direction of First Industrial i.e., First Industrial and LXP Industrial go up and down completely randomly.
Pair Corralation between First Industrial and LXP Industrial
Allowing for the 90-day total investment horizon First Industrial Realty is expected to generate 0.85 times more return on investment than LXP Industrial. However, First Industrial Realty is 1.18 times less risky than LXP Industrial. It trades about 0.08 of its potential returns per unit of risk. LXP Industrial Trust is currently generating about -0.06 per unit of risk. If you would invest 5,226 in First Industrial Realty on November 18, 2024 and sell it today you would earn a total of 335.00 from holding First Industrial Realty or generate 6.41% 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. LXP Industrial Trust
Performance |
| Timeline |
| First Industrial Realty |
| LXP Industrial Trust |
First Industrial and LXP Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Industrial and LXP Industrial
The main advantage of trading using opposite First Industrial and LXP Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Industrial position performs unexpectedly, LXP Industrial 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 LXP Industrial will offset losses from the drop in LXP Industrial'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 |
| LXP Industrial vs. First Industrial Realty | LXP Industrial vs. Plymouth Industrial REIT | LXP Industrial vs. Global Self Storage | LXP Industrial vs. Terreno 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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