Correlation Between Vornado Realty and LXP Industrial
Can any of the company-specific risk be diversified away by investing in both Vornado Realty and LXP 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 Vornado Realty and LXP Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vornado Realty Trust and LXP Industrial Trust, you can compare the effects of market volatilities on Vornado Realty and LXP 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 Vornado Realty with a short position of LXP Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vornado Realty and LXP Industrial.
Diversification Opportunities for Vornado Realty and LXP Industrial
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Vornado and LXP is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Vornado Realty Trust and LXP Industrial Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LXP Industrial Trust and Vornado 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 Vornado Realty Trust are associated (or correlated) with LXP Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LXP Industrial Trust has no effect on the direction of Vornado Realty i.e., Vornado Realty and LXP Industrial go up and down completely randomly.
Pair Corralation between Vornado Realty and LXP Industrial
Assuming the 90 days trading horizon Vornado Realty Trust is expected to under-perform the LXP Industrial. But the preferred stock apears to be less risky and, when comparing its historical volatility, Vornado Realty Trust is 1.32 times less risky than LXP Industrial. The preferred stock trades about -0.26 of its potential returns per unit of risk. The LXP Industrial Trust is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 945.00 in LXP Industrial Trust on August 27, 2024 and sell it today you would lose (17.00) from holding LXP Industrial Trust or give up 1.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vornado Realty Trust vs. LXP Industrial Trust
Performance |
| Timeline |
| Vornado Realty Trust |
| LXP Industrial Trust |
Vornado Realty and LXP Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vornado Realty and LXP Industrial
The main advantage of trading using opposite Vornado Realty and LXP Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vornado Realty position performs unexpectedly, LXP 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 LXP Industrial will offset losses from the drop in LXP Industrial's long position.| Vornado Realty vs. SL Green Realty | Vornado Realty vs. Vornado Realty Trust | Vornado Realty vs. City Office REIT | Vornado Realty vs. Vornado Realty Trust |
| LXP Industrial vs. First Industrial Realty | LXP Industrial vs. Plymouth Industrial REIT | LXP Industrial vs. Global Self Storage | LXP 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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