Correlation Between LXP Industrial and Five Point
Can any of the company-specific risk be diversified away by investing in both LXP Industrial and Five Point 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 LXP Industrial and Five Point into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LXP Industrial Trust and Five Point Holdings, you can compare the effects of market volatilities on LXP Industrial and Five Point 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 LXP Industrial with a short position of Five Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of LXP Industrial and Five Point.
Diversification Opportunities for LXP Industrial and Five Point
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between LXP and Five is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding LXP Industrial Trust and Five Point Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Five Point Holdings and LXP 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 LXP Industrial Trust are associated (or correlated) with Five Point. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Five Point Holdings has no effect on the direction of LXP Industrial i.e., LXP Industrial and Five Point go up and down completely randomly.
Pair Corralation between LXP Industrial and Five Point
Considering the 90-day investment horizon LXP Industrial is expected to generate 83.36 times less return on investment than Five Point. But when comparing it to its historical volatility, LXP Industrial Trust is 1.86 times less risky than Five Point. It trades about 0.0 of its potential returns per unit of risk. Five Point Holdings is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 225.00 in Five Point Holdings on August 27, 2024 and sell it today you would earn a total of 164.00 from holding Five Point Holdings or generate 72.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LXP Industrial Trust vs. Five Point Holdings
Performance |
| Timeline |
| LXP Industrial Trust |
| Five Point Holdings |
LXP Industrial and Five Point Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LXP Industrial and Five Point
The main advantage of trading using opposite LXP Industrial and Five Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LXP Industrial position performs unexpectedly, Five Point 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 Five Point will offset losses from the drop in Five Point's long position.| LXP Industrial vs. First Industrial Realty | LXP Industrial vs. Plymouth Industrial REIT | LXP Industrial vs. Global Self Storage | LXP Industrial vs. Terreno Realty |
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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