Correlation Between Global Self and LXP Industrial

Can any of the company-specific risk be diversified away by investing in both Global Self 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 Global Self and LXP Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Global Self Storage and LXP Industrial Trust, you can compare the effects of market volatilities on Global Self 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 Global Self with a short position of LXP Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Self and LXP Industrial.

Diversification Opportunities for Global Self and LXP Industrial

0.09

Correlation Coefficient

Global Self  LXP Industrial

Significant diversification

The 3 months correlation between Global and LXP is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Global Self Storage 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 Global Self 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 Global Self Storage 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 Global Self i.e., Global Self and LXP Industrial go up and down completely randomly.

Pair Corralation between Global Self and LXP Industrial

Given the investment horizon of 90 days Global Self Storage is expected to generate 1.22 times more return on investment than LXP Industrial. However, Global Self is 1.22 times more volatile than LXP Industrial Trust. It trades about 0.0 of its potential returns per unit of risk. LXP Industrial Trust is currently generating about -0.01 per unit of risk. If you would invest  536.00  in Global Self Storage on February 28, 2024 and sell it today you would lose (41.00) from holding Global Self Storage or give up 7.65% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Global Self Storage  vs.  LXP Industrial Trust

Global Self Storage

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Global Self Storage are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak essential indicators, Global Self reported solid returns over the last few months and may actually be approaching a breakup point.

LXP Industrial Trust

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in LXP Industrial Trust are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, LXP Industrial is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Global Self and LXP Industrial

The main advantage of trading using opposite Global Self and LXP Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Self 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.

The idea behind Global Self Storage and LXP Industrial Trust pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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.