Correlation Between STAG Industrial and Innovative Industrial
Can any of the company-specific risk be diversified away by investing in both STAG 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 STAG 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 STAG Industrial and Innovative Industrial Properties, you can compare the effects of market volatilities on STAG 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 STAG Industrial with a short position of Innovative Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of STAG Industrial and Innovative Industrial.
Diversification Opportunities for STAG Industrial and Innovative Industrial
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between STAG and Innovative is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding STAG Industrial and Innovative Industrial Properti in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovative Industrial and STAG 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 STAG Industrial 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 STAG Industrial i.e., STAG Industrial and Innovative Industrial go up and down completely randomly.
Pair Corralation between STAG Industrial and Innovative Industrial
Given the investment horizon of 90 days STAG Industrial is expected to generate 2.72 times less return on investment than Innovative Industrial. But when comparing it to its historical volatility, STAG Industrial is 2.89 times less risky than Innovative Industrial. It trades about 0.14 of its potential returns per unit of risk. Innovative Industrial Properties is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 6,797 in Innovative Industrial Properties on November 25, 2024 and sell it today you would earn a total of 470.00 from holding Innovative Industrial Properties or generate 6.91% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
STAG Industrial vs. Innovative Industrial Properti
Performance |
Timeline |
STAG Industrial |
Innovative Industrial |
STAG Industrial and Innovative Industrial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with STAG Industrial and Innovative Industrial
The main advantage of trading using opposite STAG Industrial and Innovative Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STAG 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.STAG Industrial vs. Public Storage | ||
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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