Correlation Between Lexington Realty and Plymouth Industrial
Can any of the company-specific risk be diversified away by investing in both Lexington Realty and Plymouth 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 Lexington Realty and Plymouth Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lexington Realty Trust and Plymouth Industrial REIT, you can compare the effects of market volatilities on Lexington Realty and Plymouth 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 Lexington Realty with a short position of Plymouth Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lexington Realty and Plymouth Industrial.
Diversification Opportunities for Lexington Realty and Plymouth Industrial
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lexington and Plymouth is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Lexington Realty Trust and Plymouth Industrial REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plymouth Industrial REIT and Lexington Realty 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 Lexington Realty Trust are associated (or correlated) with Plymouth Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plymouth Industrial REIT has no effect on the direction of Lexington Realty i.e., Lexington Realty and Plymouth Industrial go up and down completely randomly.
Pair Corralation between Lexington Realty and Plymouth Industrial
Assuming the 90 days trading horizon Lexington Realty Trust is expected to generate 0.72 times more return on investment than Plymouth Industrial. However, Lexington Realty Trust is 1.39 times less risky than Plymouth Industrial. It trades about 0.1 of its potential returns per unit of risk. Plymouth Industrial REIT is currently generating about -0.04 per unit of risk. If you would invest 4,406 in Lexington Realty Trust on September 1, 2024 and sell it today you would earn a total of 596.00 from holding Lexington Realty Trust or generate 13.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lexington Realty Trust vs. Plymouth Industrial REIT
Performance |
| Timeline |
| Lexington Realty Trust |
| Plymouth Industrial REIT |
Lexington Realty and Plymouth Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lexington Realty and Plymouth Industrial
The main advantage of trading using opposite Lexington Realty and Plymouth Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lexington Realty position performs unexpectedly, Plymouth 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 Plymouth Industrial will offset losses from the drop in Plymouth Industrial's long position.| Lexington Realty vs. Prologis | Lexington Realty vs. Public Storage | Lexington Realty vs. LXP Industrial Trust | Lexington Realty vs. Plymouth Industrial REIT |
| Plymouth Industrial vs. Rexford Industrial Realty | Plymouth Industrial vs. EastGroup Properties | Plymouth Industrial vs. LXP Industrial Trust | Plymouth Industrial vs. First Industrial Realty |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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