Correlation Between First Industrial and Sterling Capital
Can any of the company-specific risk be diversified away by investing in both First Industrial and Sterling Capital 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 Sterling Capital 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 Sterling Capital Stratton, you can compare the effects of market volatilities on First Industrial and Sterling Capital 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 Sterling Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Industrial and Sterling Capital.
Diversification Opportunities for First Industrial and Sterling Capital
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between First and STERLING is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding First Industrial Realty and Sterling Capital Stratton in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital Stratton 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 Sterling Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sterling Capital Stratton has no effect on the direction of First Industrial i.e., First Industrial and Sterling Capital go up and down completely randomly.
Pair Corralation between First Industrial and Sterling Capital
Allowing for the 90-day total investment horizon First Industrial is expected to generate 3.56 times less return on investment than Sterling Capital. In addition to that, First Industrial is 1.12 times more volatile than Sterling Capital Stratton. It trades about 0.02 of its total potential returns per unit of risk. Sterling Capital Stratton is currently generating about 0.07 per unit of volatility. If you would invest 3,927 in Sterling Capital Stratton on August 26, 2024 and sell it today you would earn a total of 49.00 from holding Sterling Capital Stratton or generate 1.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Industrial Realty vs. Sterling Capital Stratton
Performance |
| Timeline |
| First Industrial Realty |
| Sterling Capital Stratton |
First Industrial and Sterling Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Industrial and Sterling Capital
The main advantage of trading using opposite First Industrial and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Industrial position performs unexpectedly, Sterling Capital 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 Sterling Capital will offset losses from the drop in Sterling Capital's long position.| First Industrial vs. Boston Properties | First Industrial vs. Alexandria Real Estate | First Industrial vs. Highwoods Properties | First Industrial vs. Piedmont Office Realty |
| Sterling Capital vs. Realty Income | Sterling Capital vs. Dynex Capital | Sterling Capital vs. First Industrial Realty | Sterling Capital 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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