Correlation Between National Retail and Innovative Industrial
Can any of the company-specific risk be diversified away by investing in both National Retail and Innovative 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 National Retail and Innovative Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Retail Properties and Innovative Industrial Properties, you can compare the effects of market volatilities on National Retail and Innovative 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 National Retail with a short position of Innovative Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Retail and Innovative Industrial.
Diversification Opportunities for National Retail and Innovative Industrial
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between National and Innovative is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding National Retail Properties and Innovative Industrial Properti in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovative Industrial and National Retail 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 National Retail Properties are associated (or correlated) with Innovative Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovative Industrial has no effect on the direction of National Retail i.e., National Retail and Innovative Industrial go up and down completely randomly.
Pair Corralation between National Retail and Innovative Industrial
Considering the 90-day investment horizon National Retail is expected to generate 5.03 times less return on investment than Innovative Industrial. But when comparing it to its historical volatility, National Retail Properties is 1.7 times less risky than Innovative Industrial. It trades about 0.03 of its potential returns per unit of risk. Innovative Industrial Properties is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 6,733 in Innovative Industrial Properties on August 28, 2024 and sell it today you would earn a total of 4,447 from holding Innovative Industrial Properties or generate 66.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Retail Properties vs. Innovative Industrial Properti
Performance |
| Timeline |
| National Retail Prop |
| Innovative Industrial |
National Retail and Innovative Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Retail and Innovative Industrial
The main advantage of trading using opposite National Retail and Innovative Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Retail position performs unexpectedly, Innovative 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 Innovative Industrial will offset losses from the drop in Innovative Industrial's long position.| National Retail vs. Acadia Realty Trust | National Retail vs. Federal Realty Investment | National Retail vs. Realty Income | National Retail vs. Whitestone REIT |
| Innovative Industrial vs. Prologis | Innovative Industrial vs. Public Storage | Innovative Industrial vs. Extra Space Storage | Innovative Industrial vs. CubeSmart |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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