Correlation Between Rexford Industrial and LXP Industrial
Can any of the company-specific risk be diversified away by investing in both Rexford Industrial and LXP 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 Rexford Industrial and LXP Industrial 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 LXP Industrial Trust, you can compare the effects of market volatilities on Rexford Industrial and LXP 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 Rexford Industrial with a short position of LXP Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rexford Industrial and LXP Industrial.
Diversification Opportunities for Rexford Industrial and LXP Industrial
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Rexford and LXP is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Rexford Industrial Realty and LXP Industrial Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LXP Industrial Trust 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 LXP Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LXP Industrial Trust has no effect on the direction of Rexford Industrial i.e., Rexford Industrial and LXP Industrial go up and down completely randomly.
Pair Corralation between Rexford Industrial and LXP Industrial
Assuming the 90 days trading horizon Rexford Industrial Realty is expected to generate 0.28 times more return on investment than LXP Industrial. However, Rexford Industrial Realty is 3.61 times less risky than LXP Industrial. It trades about 0.05 of its potential returns per unit of risk. LXP Industrial Trust is currently generating about -0.02 per unit of risk. If you would invest 2,299 in Rexford Industrial Realty on September 1, 2024 and sell it today you would earn a total of 11.00 from holding Rexford Industrial Realty or generate 0.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rexford Industrial Realty vs. LXP Industrial Trust
Performance |
| Timeline |
| Rexford Industrial Realty |
| LXP Industrial Trust |
Rexford Industrial and LXP Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rexford Industrial and LXP Industrial
The main advantage of trading using opposite Rexford Industrial and LXP Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rexford Industrial position performs unexpectedly, LXP 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 LXP Industrial will offset losses from the drop in LXP Industrial's long position.| Rexford Industrial vs. National Storage Affiliates | Rexford Industrial vs. Public Storage | Rexford Industrial vs. Digital Realty Trust |
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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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