Correlation Between First Industrial and STAG Industrial
Can any of the company-specific risk be diversified away by investing in both First Industrial and STAG 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 STAG 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 STAG Industrial, you can compare the effects of market volatilities on First Industrial and STAG 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 STAG Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Industrial and STAG Industrial.
Diversification Opportunities for First Industrial and STAG Industrial
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and STAG is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding First Industrial Realty and STAG Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STAG Industrial 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 STAG Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STAG Industrial has no effect on the direction of First Industrial i.e., First Industrial and STAG Industrial go up and down completely randomly.
Pair Corralation between First Industrial and STAG Industrial
Allowing for the 90-day total investment horizon First Industrial Realty is expected to generate 0.87 times more return on investment than STAG Industrial. However, First Industrial Realty is 1.14 times less risky than STAG Industrial. It trades about 0.06 of its potential returns per unit of risk. STAG Industrial is currently generating about -0.03 per unit of risk. If you would invest 5,340 in First Industrial Realty on August 31, 2024 and sell it today you would earn a total of 68.00 from holding First Industrial Realty or generate 1.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Industrial Realty vs. STAG Industrial
Performance |
| Timeline |
| First Industrial Realty |
| STAG Industrial |
First Industrial and STAG Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Industrial and STAG Industrial
The main advantage of trading using opposite First Industrial and STAG Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Industrial position performs unexpectedly, STAG 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 STAG Industrial will offset losses from the drop in STAG 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 |
| STAG Industrial vs. Public Storage | STAG Industrial vs. Extra Space Storage | STAG Industrial vs. Rexford Industrial Realty | STAG Industrial vs. Innovative Industrial Properties |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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