Correlation Between Innovative Industrial and Terreno Realty

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Can any of the company-specific risk be diversified away by investing in both Innovative Industrial and Terreno Realty 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 Innovative Industrial and Terreno Realty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Innovative Industrial Properties and Terreno Realty, you can compare the effects of market volatilities on Innovative Industrial and Terreno Realty 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 Innovative Industrial with a short position of Terreno Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovative Industrial and Terreno Realty.

Diversification Opportunities for Innovative Industrial and Terreno Realty

InnovativeTerrenoDiversified AwayInnovativeTerrenoDiversified Away100%
-0.27
  Correlation Coefficient

Very good diversification

The 3 months correlation between Innovative and Terreno is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Innovative Industrial Properti and Terreno Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Terreno Realty and Innovative 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 Innovative Industrial Properties are associated (or correlated) with Terreno Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Terreno Realty has no effect on the direction of Innovative Industrial i.e., Innovative Industrial and Terreno Realty go up and down completely randomly.

Pair Corralation between Innovative Industrial and Terreno Realty

Given the investment horizon of 90 days Innovative Industrial Properties is expected to generate 2.92 times more return on investment than Terreno Realty. However, Innovative Industrial is 2.92 times more volatile than Terreno Realty. It trades about 0.13 of its potential returns per unit of risk. Terreno Realty is currently generating about 0.18 per unit of risk. If you would invest  6,797  in Innovative Industrial Properties on November 25, 2024 and sell it today you would earn a total of  470.00  from holding Innovative Industrial Properties or generate 6.91% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Innovative Industrial Properti  vs.  Terreno Realty

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -30-20-10010
JavaScript chart by amCharts 3.21.15IIPR TRNO
       Timeline  
Innovative Industrial 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Innovative Industrial Properties has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in March 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb708090100110
Terreno Realty 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Terreno Realty are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Terreno Realty may actually be approaching a critical reversion point that can send shares even higher in March 2025.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb586062646668

Innovative Industrial and Terreno Realty Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-5.99-4.49-2.98-1.48-0.02231.292.633.965.36.64 0.050.100.15
JavaScript chart by amCharts 3.21.15IIPR TRNO
       Returns  

Pair Trading with Innovative Industrial and Terreno Realty

The main advantage of trading using opposite Innovative Industrial and Terreno Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovative Industrial position performs unexpectedly, Terreno Realty 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 Terreno Realty will offset losses from the drop in Terreno Realty's long position.
The idea behind Innovative Industrial Properties and Terreno Realty pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.

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