Correlation Between Power REIT and First Industrial
Can any of the company-specific risk be diversified away by investing in both Power REIT and First 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 Power REIT and First Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Power REIT and First Industrial Realty, you can compare the effects of market volatilities on Power REIT and First 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 Power REIT with a short position of First Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power REIT and First Industrial.
Diversification Opportunities for Power REIT and First Industrial
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Power and First is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Power REIT and First Industrial Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Industrial Realty and Power REIT 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 Power REIT are associated (or correlated) with First Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Industrial Realty has no effect on the direction of Power REIT i.e., Power REIT and First Industrial go up and down completely randomly.
Pair Corralation between Power REIT and First Industrial
Allowing for the 90-day total investment horizon Power REIT is expected to generate 4.32 times more return on investment than First Industrial. However, Power REIT is 4.32 times more volatile than First Industrial Realty. It trades about 0.08 of its potential returns per unit of risk. First Industrial Realty is currently generating about 0.03 per unit of risk. If you would invest 114.00 in Power REIT on August 29, 2024 and sell it today you would earn a total of 8.00 from holding Power REIT or generate 7.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Power REIT vs. First Industrial Realty
Performance |
| Timeline |
| Power REIT |
| First Industrial Realty |
Power REIT and First Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Power REIT and First Industrial
The main advantage of trading using opposite Power REIT and First Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power REIT position performs unexpectedly, First 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 First Industrial will offset losses from the drop in First Industrial's long position.| Power REIT vs. Newlake Capital Partners | Power REIT vs. Outfront Media | Power REIT vs. Uniti Group | Power REIT vs. Farmland Partners |
| First Industrial vs. LXP Industrial Trust | First Industrial vs. Plymouth Industrial REIT | First Industrial vs. Global Self Storage | First Industrial vs. Terreno 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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