Correlation Between Lexington Realty and Global Self
Can any of the company-specific risk be diversified away by investing in both Lexington Realty and Global Self 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 Global Self 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 Global Self Storage, you can compare the effects of market volatilities on Lexington Realty and Global Self 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 Global Self. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lexington Realty and Global Self.
Diversification Opportunities for Lexington Realty and Global Self
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lexington and Global is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Lexington Realty Trust and Global Self Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Self Storage 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 Global Self. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Self Storage has no effect on the direction of Lexington Realty i.e., Lexington Realty and Global Self go up and down completely randomly.
Pair Corralation between Lexington Realty and Global Self
Assuming the 90 days trading horizon Lexington Realty Trust is expected to under-perform the Global Self. But the preferred stock apears to be less risky and, when comparing its historical volatility, Lexington Realty Trust is 1.01 times less risky than Global Self. The preferred stock trades about -0.04 of its potential returns per unit of risk. The Global Self Storage is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 497.00 in Global Self Storage on August 30, 2024 and sell it today you would earn a total of 18.00 from holding Global Self Storage or generate 3.62% 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. Global Self Storage
Performance |
| Timeline |
| Lexington Realty Trust |
| Global Self Storage |
Lexington Realty and Global Self Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lexington Realty and Global Self
The main advantage of trading using opposite Lexington Realty and Global Self positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lexington Realty position performs unexpectedly, Global Self 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 Global Self will offset losses from the drop in Global Self's long position.| Lexington Realty vs. Prologis | Lexington Realty vs. Public Storage | Lexington Realty vs. LXP Industrial Trust | Lexington Realty vs. Plymouth Industrial REIT |
| Global Self vs. LXP Industrial Trust | Global Self vs. First Industrial Realty | Global Self vs. Plymouth Industrial REIT | Global Self vs. Terreno 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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