Correlation Between First Industrial and New England
Can any of the company-specific risk be diversified away by investing in both First Industrial and New England 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 New England 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 New England Realty, you can compare the effects of market volatilities on First Industrial and New England 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 New England. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Industrial and New England.
Diversification Opportunities for First Industrial and New England
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and New is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding First Industrial Realty and New England Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New England Realty 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 New England. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New England Realty has no effect on the direction of First Industrial i.e., First Industrial and New England go up and down completely randomly.
Pair Corralation between First Industrial and New England
Allowing for the 90-day total investment horizon First Industrial Realty is expected to generate 0.39 times more return on investment than New England. However, First Industrial Realty is 2.59 times less risky than New England. It trades about 0.08 of its potential returns per unit of risk. New England Realty is currently generating about 0.01 per unit of risk. If you would invest 5,357 in First Industrial Realty on August 27, 2024 and sell it today you would earn a total of 90.00 from holding First Industrial Realty or generate 1.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 38.1% |
| Values | Daily Returns |
First Industrial Realty vs. New England Realty
Performance |
| Timeline |
| First Industrial Realty |
| New England Realty |
First Industrial and New England Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Industrial and New England
The main advantage of trading using opposite First Industrial and New England positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Industrial position performs unexpectedly, New England 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 New England will offset losses from the drop in New England'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 |
| New England vs. The Intergroup | New England vs. Transcontinental Realty Investors | New England vs. American Realty Investors | New England vs. Gyrodyne Company of |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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