Correlation Between First Industrial and National Retail
Can any of the company-specific risk be diversified away by investing in both First Industrial and National Retail 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 National Retail 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 National Retail Properties, you can compare the effects of market volatilities on First Industrial and National Retail 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 National Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Industrial and National Retail.
Diversification Opportunities for First Industrial and National Retail
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between First and National is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding First Industrial Realty and National Retail Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Retail Prop 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 National Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Retail Prop has no effect on the direction of First Industrial i.e., First Industrial and National Retail go up and down completely randomly.
Pair Corralation between First Industrial and National Retail
Allowing for the 90-day total investment horizon First Industrial Realty is expected to generate 1.09 times more return on investment than National Retail. However, First Industrial is 1.09 times more volatile than National Retail Properties. It trades about 0.12 of its potential returns per unit of risk. National Retail Properties is currently generating about 0.06 per unit of risk. If you would invest 4,602 in First Industrial Realty on August 30, 2024 and sell it today you would earn a total of 806.00 from holding First Industrial Realty or generate 17.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Industrial Realty vs. National Retail Properties
Performance |
| Timeline |
| First Industrial Realty |
| National Retail Prop |
First Industrial and National Retail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Industrial and National Retail
The main advantage of trading using opposite First Industrial and National Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Industrial position performs unexpectedly, National Retail 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 National Retail will offset losses from the drop in National Retail'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 |
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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 Stocks Directory module to find actively traded stocks across global markets.
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