Correlation Between Plymouth Industrial and Lexington Realty
Can any of the company-specific risk be diversified away by investing in both Plymouth Industrial 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 Plymouth Industrial and Lexington Realty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Plymouth Industrial REIT and Lexington Realty Trust, you can compare the effects of market volatilities on Plymouth Industrial 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 Plymouth Industrial with a short position of Lexington Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Plymouth Industrial and Lexington Realty.
Diversification Opportunities for Plymouth Industrial and Lexington Realty
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Plymouth and Lexington is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Plymouth Industrial REIT 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 Plymouth 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 Plymouth Industrial REIT 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 Plymouth Industrial i.e., Plymouth Industrial and Lexington Realty go up and down completely randomly.
Pair Corralation between Plymouth Industrial and Lexington Realty
Given the investment horizon of 90 days Plymouth Industrial REIT is expected to under-perform the Lexington Realty. In addition to that, Plymouth Industrial is 2.04 times more volatile than Lexington Realty Trust. It trades about -0.07 of its total potential returns per unit of risk. Lexington Realty Trust is currently generating about 0.04 per unit of volatility. If you would invest 4,728 in Lexington Realty Trust on November 8, 2024 and sell it today you would earn a total of 32.00 from holding Lexington Realty Trust or generate 0.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Plymouth Industrial REIT vs. Lexington Realty Trust
Performance |
| Timeline |
| Plymouth Industrial REIT |
| Lexington Realty Trust |
Plymouth Industrial and Lexington Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Plymouth Industrial and Lexington Realty
The main advantage of trading using opposite Plymouth Industrial and Lexington Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Plymouth Industrial 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.| Plymouth Industrial vs. Rexford Industrial Realty | Plymouth Industrial vs. EastGroup Properties | Plymouth Industrial vs. LXP Industrial Trust | Plymouth Industrial vs. First Industrial Realty |
| 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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