Correlation Between Rexford Industrial and EPR Properties
Can any of the company-specific risk be diversified away by investing in both Rexford Industrial and EPR Properties 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 Rexford Industrial and EPR Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rexford Industrial Realty and EPR Properties, you can compare the effects of market volatilities on Rexford Industrial and EPR Properties 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 Rexford Industrial with a short position of EPR Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rexford Industrial and EPR Properties.
Diversification Opportunities for Rexford Industrial and EPR Properties
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Rexford and EPR is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Rexford Industrial Realty and EPR Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EPR Properties and Rexford 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 Rexford Industrial Realty are associated (or correlated) with EPR Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EPR Properties has no effect on the direction of Rexford Industrial i.e., Rexford Industrial and EPR Properties go up and down completely randomly.
Pair Corralation between Rexford Industrial and EPR Properties
Assuming the 90 days trading horizon Rexford Industrial is expected to generate 2.0 times less return on investment than EPR Properties. In addition to that, Rexford Industrial is 1.27 times more volatile than EPR Properties. It trades about 0.03 of its total potential returns per unit of risk. EPR Properties is currently generating about 0.07 per unit of volatility. If you would invest 1,511 in EPR Properties on September 3, 2024 and sell it today you would earn a total of 714.00 from holding EPR Properties or generate 47.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Rexford Industrial Realty vs. EPR Properties
Performance |
| Timeline |
| Rexford Industrial Realty |
| EPR Properties |
Rexford Industrial and EPR Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rexford Industrial and EPR Properties
The main advantage of trading using opposite Rexford Industrial and EPR Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rexford Industrial position performs unexpectedly, EPR Properties 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 EPR Properties will offset losses from the drop in EPR Properties' long position.| Rexford Industrial vs. Prologis | Rexford Industrial vs. LXP Industrial Trust | Rexford Industrial vs. Public Storage | Rexford Industrial vs. Rexford Industrial Realty |
| EPR Properties vs. Digital Realty Trust | EPR Properties vs. Digital Realty Trust | EPR Properties vs. Gladstone Land Corp | EPR Properties vs. EPR Properties |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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