Correlation Between STAG Industrial and Plymouth Industrial
Can any of the company-specific risk be diversified away by investing in both STAG Industrial and Plymouth 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 Plymouth 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 Plymouth Industrial REIT, you can compare the effects of market volatilities on STAG Industrial and Plymouth 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 Plymouth Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of STAG Industrial and Plymouth Industrial.
Diversification Opportunities for STAG Industrial and Plymouth Industrial
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between STAG and Plymouth is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding STAG Industrial and Plymouth Industrial REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plymouth Industrial REIT 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 Plymouth Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plymouth Industrial REIT has no effect on the direction of STAG Industrial i.e., STAG Industrial and Plymouth Industrial go up and down completely randomly.
Pair Corralation between STAG Industrial and Plymouth Industrial
Given the investment horizon of 90 days STAG Industrial is expected to generate 0.6 times more return on investment than Plymouth Industrial. However, STAG Industrial is 1.68 times less risky than Plymouth Industrial. It trades about -0.16 of its potential returns per unit of risk. Plymouth Industrial REIT is currently generating about -0.25 per unit of risk. If you would invest 3,792 in STAG Industrial on August 24, 2024 and sell it today you would lose (180.00) from holding STAG Industrial or give up 4.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
STAG Industrial vs. Plymouth Industrial REIT
Performance |
| Timeline |
| STAG Industrial |
| Plymouth Industrial REIT |
STAG Industrial and Plymouth Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STAG Industrial and Plymouth Industrial
The main advantage of trading using opposite STAG Industrial and Plymouth Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STAG Industrial position performs unexpectedly, Plymouth 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 Plymouth Industrial will offset losses from the drop in Plymouth Industrial's long position.| STAG Industrial vs. Public Storage | STAG Industrial vs. Extra Space Storage | STAG Industrial vs. Rexford Industrial Realty | STAG Industrial vs. Innovative Industrial Properties |
| Plymouth Industrial vs. Rexford Industrial Realty | Plymouth Industrial vs. EastGroup Properties | Plymouth Industrial vs. LXP Industrial Trust | Plymouth Industrial vs. First Industrial 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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