Correlation Between Terreno Realty and First Industrial
Can any of the company-specific risk be diversified away by investing in both Terreno Realty 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 Terreno Realty and First Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Terreno Realty and First Industrial Realty, you can compare the effects of market volatilities on Terreno Realty 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 Terreno Realty with a short position of First Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Terreno Realty and First Industrial.
Diversification Opportunities for Terreno Realty and First Industrial
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Terreno and First is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Terreno 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 Terreno Realty 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 Terreno 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 Terreno Realty i.e., Terreno Realty and First Industrial go up and down completely randomly.
Pair Corralation between Terreno Realty and First Industrial
Given the investment horizon of 90 days Terreno Realty is expected to under-perform the First Industrial. In addition to that, Terreno Realty is 1.27 times more volatile than First Industrial Realty. It trades about -0.16 of its total potential returns per unit of risk. First Industrial Realty is currently generating about -0.18 per unit of volatility. If you would invest 5,500 in First Industrial Realty on August 23, 2024 and sell it today you would lose (231.00) from holding First Industrial Realty or give up 4.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Terreno Realty vs. First Industrial Realty
Performance |
| Timeline |
| Terreno Realty |
| First Industrial Realty |
Terreno Realty and First Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Terreno Realty and First Industrial
The main advantage of trading using opposite Terreno Realty and First Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Terreno Realty 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.| Terreno Realty vs. Plymouth Industrial REIT | Terreno Realty vs. EastGroup Properties | Terreno Realty vs. LXP Industrial Trust | Terreno Realty vs. First Industrial Realty |
| 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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