Correlation Between First Industrial and West Loop
Can any of the company-specific risk be diversified away by investing in both First Industrial and West Loop 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 West Loop 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 West Loop Realty, you can compare the effects of market volatilities on First Industrial and West Loop 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 West Loop. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Industrial and West Loop.
Diversification Opportunities for First Industrial and West Loop
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and West is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding First Industrial Realty and West Loop Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on West Loop 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 West Loop. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of West Loop Realty has no effect on the direction of First Industrial i.e., First Industrial and West Loop go up and down completely randomly.
Pair Corralation between First Industrial and West Loop
Allowing for the 90-day total investment horizon First Industrial is expected to generate 27.06 times less return on investment than West Loop. In addition to that, First Industrial is 1.31 times more volatile than West Loop Realty. It trades about 0.0 of its total potential returns per unit of risk. West Loop Realty is currently generating about 0.1 per unit of volatility. If you would invest 1,364 in West Loop Realty on August 27, 2024 and sell it today you would earn a total of 106.00 from holding West Loop Realty or generate 7.77% 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. West Loop Realty
Performance |
| Timeline |
| First Industrial Realty |
| West Loop Realty |
First Industrial and West Loop Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Industrial and West Loop
The main advantage of trading using opposite First Industrial and West Loop positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Industrial position performs unexpectedly, West Loop 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 West Loop will offset losses from the drop in West Loop'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 |
| West Loop vs. Realty Income | West Loop vs. Dynex Capital | West Loop vs. First Industrial Realty | West Loop vs. Healthcare Realty Trust |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity |