Correlation Between First Industrial and Welltower
Can any of the company-specific risk be diversified away by investing in both First Industrial and Welltower 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 Welltower 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 Welltower, you can compare the effects of market volatilities on First Industrial and Welltower 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 Welltower. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Industrial and Welltower.
Diversification Opportunities for First Industrial and Welltower
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between First and Welltower is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding First Industrial Realty and Welltower in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Welltower 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 Welltower. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Welltower has no effect on the direction of First Industrial i.e., First Industrial and Welltower go up and down completely randomly.
Pair Corralation between First Industrial and Welltower
Allowing for the 90-day total investment horizon First Industrial Realty is expected to under-perform the Welltower. But the stock apears to be less risky and, when comparing its historical volatility, First Industrial Realty is 1.25 times less risky than Welltower. The stock trades about -0.07 of its potential returns per unit of risk. The Welltower is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 12,740 in Welltower on August 30, 2024 and sell it today you would earn a total of 1,190 from holding Welltower or generate 9.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Industrial Realty vs. Welltower
Performance |
| Timeline |
| First Industrial Realty |
| Welltower |
First Industrial and Welltower Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Industrial and Welltower
The main advantage of trading using opposite First Industrial and Welltower positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Industrial position performs unexpectedly, Welltower 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 Welltower will offset losses from the drop in Welltower'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 |
| Welltower vs. Boston Properties | Welltower vs. Douglas Emmett | Welltower vs. Kilroy Realty Corp | Welltower vs. Highwoods 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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