Correlation Between SL Green and First Industrial
Can any of the company-specific risk be diversified away by investing in both SL Green 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 SL Green and First Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SL Green Realty and First Industrial Realty, you can compare the effects of market volatilities on SL Green 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 SL Green with a short position of First Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of SL Green and First Industrial.
Diversification Opportunities for SL Green and First Industrial
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between SLG and First is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding SL Green Realty 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 SL Green 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 SL Green Realty 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 SL Green i.e., SL Green and First Industrial go up and down completely randomly.
Pair Corralation between SL Green and First Industrial
Considering the 90-day investment horizon SL Green Realty is expected to generate 1.81 times more return on investment than First Industrial. However, SL Green is 1.81 times more volatile than First Industrial Realty. It trades about 0.13 of its potential returns per unit of risk. First Industrial Realty is currently generating about 0.02 per unit of risk. If you would invest 4,791 in SL Green Realty on September 1, 2024 and sell it today you would earn a total of 3,028 from holding SL Green Realty or generate 63.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SL Green Realty vs. First Industrial Realty
Performance |
| Timeline |
| SL Green Realty |
| First Industrial Realty |
SL Green and First Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SL Green and First Industrial
The main advantage of trading using opposite SL Green and First Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SL Green 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.| SL Green vs. Boston Properties | SL Green vs. Douglas Emmett | SL Green vs. Kilroy Realty Corp | SL Green vs. Alexandria Real Estate |
| 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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