Correlation Between LXP Industrial and Plymouth Industrial
Can any of the company-specific risk be diversified away by investing in both LXP Industrial 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 LXP Industrial and Plymouth Industrial 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 Plymouth Industrial REIT, you can compare the effects of market volatilities on LXP Industrial 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 LXP Industrial with a short position of Plymouth Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of LXP Industrial and Plymouth Industrial.
Diversification Opportunities for LXP Industrial and Plymouth Industrial
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between LXP and Plymouth is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding LXP Industrial 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 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 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 LXP Industrial i.e., LXP Industrial and Plymouth Industrial go up and down completely randomly.
Pair Corralation between LXP Industrial and Plymouth Industrial
Considering the 90-day investment horizon LXP Industrial Trust is expected to under-perform the Plymouth Industrial. But the stock apears to be less risky and, when comparing its historical volatility, LXP Industrial Trust is 1.25 times less risky than Plymouth Industrial. The stock trades about -0.13 of its potential returns per unit of risk. The Plymouth Industrial REIT is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 1,821 in Plymouth Industrial REIT on November 3, 2024 and sell it today you would lose (141.00) from holding Plymouth Industrial REIT or give up 7.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
LXP Industrial Trust vs. Plymouth Industrial REIT
Performance |
| Timeline |
| LXP Industrial Trust |
| Plymouth Industrial REIT |
LXP Industrial and Plymouth Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LXP Industrial and Plymouth Industrial
The main advantage of trading using opposite LXP Industrial and Plymouth Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LXP Industrial 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.| LXP Industrial vs. First Industrial Realty | LXP Industrial vs. Plymouth Industrial REIT | LXP Industrial vs. Global Self Storage | LXP Industrial vs. Terreno Realty |
| 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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