Correlation Between First Industrial and Industrial Logistics
Can any of the company-specific risk be diversified away by investing in both First Industrial and Industrial Logistics 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 First Industrial and Industrial Logistics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Industrial Realty and Industrial Logistics Properties, you can compare the effects of market volatilities on First Industrial and Industrial Logistics 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 First Industrial with a short position of Industrial Logistics. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Industrial and Industrial Logistics.
Diversification Opportunities for First Industrial and Industrial Logistics
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between First and Industrial is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding First Industrial Realty and Industrial Logistics Propertie in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrial Logistics and First 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 First Industrial Realty are associated (or correlated) with Industrial Logistics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrial Logistics has no effect on the direction of First Industrial i.e., First Industrial and Industrial Logistics go up and down completely randomly.
Pair Corralation between First Industrial and Industrial Logistics
Allowing for the 90-day total investment horizon First Industrial Realty is expected to under-perform the Industrial Logistics. But the stock apears to be less risky and, when comparing its historical volatility, First Industrial Realty is 2.34 times less risky than Industrial Logistics. The stock trades about -0.28 of its potential returns per unit of risk. The Industrial Logistics Properties is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 406.00 in Industrial Logistics Properties on January 20, 2024 and sell it today you would lose (44.00) from holding Industrial Logistics Properties or give up 10.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Industrial Realty vs. Industrial Logistics Propertie
Performance |
| Timeline |
| First Industrial Realty |
| Industrial Logistics |
First Industrial and Industrial Logistics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Industrial and Industrial Logistics
The main advantage of trading using opposite First Industrial and Industrial Logistics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Industrial position performs unexpectedly, Industrial Logistics 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 Industrial Logistics will offset losses from the drop in Industrial Logistics' long position.| First Industrial vs. LXP Industrial Trust | First Industrial vs. Plymouth Industrial REIT | First Industrial vs. Global Self Storage | First Industrial vs. Terreno Realty |
| Industrial Logistics vs. Terreno Realty | Industrial Logistics vs. LXP Industrial Trust | Industrial Logistics vs. Rexford Industrial Realty | Industrial Logistics 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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