Correlation Between Rexford Industrial and Innovative Industrial
Can any of the company-specific risk be diversified away by investing in both Rexford Industrial and Innovative 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 Innovative 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 Innovative Industrial Properties, you can compare the effects of market volatilities on Rexford Industrial and Innovative 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 Innovative Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rexford Industrial and Innovative Industrial.
Diversification Opportunities for Rexford Industrial and Innovative Industrial
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Rexford and Innovative is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Rexford Industrial Realty and Innovative Industrial Properti in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovative Industrial 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 Innovative Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovative Industrial has no effect on the direction of Rexford Industrial i.e., Rexford Industrial and Innovative Industrial go up and down completely randomly.
Pair Corralation between Rexford Industrial and Innovative Industrial
Given the investment horizon of 90 days Rexford Industrial Realty is expected to under-perform the Innovative Industrial. But the stock apears to be less risky and, when comparing its historical volatility, Rexford Industrial Realty is 1.47 times less risky than Innovative Industrial. The stock trades about -0.05 of its potential returns per unit of risk. The Innovative Industrial Properties is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 8,672 in Innovative Industrial Properties on November 9, 2024 and sell it today you would lose (1,269) from holding Innovative Industrial Properties or give up 14.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rexford Industrial Realty vs. Innovative Industrial Properti
Performance |
| Timeline |
| Rexford Industrial Realty |
| Innovative Industrial |
Rexford Industrial and Innovative Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rexford Industrial and Innovative Industrial
The main advantage of trading using opposite Rexford Industrial and Innovative Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rexford Industrial position performs unexpectedly, Innovative 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 Innovative Industrial will offset losses from the drop in Innovative Industrial's long position.| Rexford Industrial vs. Plymouth Industrial REIT | Rexford Industrial vs. EastGroup Properties | Rexford Industrial vs. LXP Industrial Trust | Rexford Industrial vs. Terreno Realty |
| Innovative Industrial vs. Prologis | Innovative Industrial vs. Public Storage | Innovative Industrial vs. Extra Space Storage | Innovative Industrial vs. CubeSmart |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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