Correlation Between Prologis and Lexington Realty
Can any of the company-specific risk be diversified away by investing in both Prologis and Lexington Realty 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 Prologis and Lexington Realty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prologis and Lexington Realty Trust, you can compare the effects of market volatilities on Prologis and Lexington Realty 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 Prologis with a short position of Lexington Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prologis and Lexington Realty.
Diversification Opportunities for Prologis and Lexington Realty
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Prologis and Lexington is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Prologis and Lexington Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lexington Realty Trust and Prologis 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 Prologis are associated (or correlated) with Lexington Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lexington Realty Trust has no effect on the direction of Prologis i.e., Prologis and Lexington Realty go up and down completely randomly.
Pair Corralation between Prologis and Lexington Realty
Assuming the 90 days horizon Prologis is expected to generate 1.52 times more return on investment than Lexington Realty. However, Prologis is 1.52 times more volatile than Lexington Realty Trust. It trades about 0.04 of its potential returns per unit of risk. Lexington Realty Trust is currently generating about 0.04 per unit of risk. If you would invest 5,640 in Prologis on November 8, 2024 and sell it today you would earn a total of 60.00 from holding Prologis or generate 1.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prologis vs. Lexington Realty Trust
Performance |
| Timeline |
| Prologis |
| Lexington Realty Trust |
Prologis and Lexington Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prologis and Lexington Realty
The main advantage of trading using opposite Prologis and Lexington Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prologis position performs unexpectedly, Lexington Realty 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 Lexington Realty will offset losses from the drop in Lexington Realty's long position.| Prologis vs. LXP Industrial Trust | Prologis vs. Public Storage | Prologis vs. Rexford Industrial Realty | Prologis vs. Lexington Realty Trust |
| Lexington Realty vs. Prologis | Lexington Realty vs. Public Storage | Lexington Realty vs. LXP Industrial Trust | Lexington Realty vs. Plymouth Industrial REIT |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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