Correlation Between First Industrial and Ventas

By analyzing existing cross correlation between First Industrial Realty and Ventas Inc you can compare the effects of market volatilities on First Industrial and Ventas 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 Ventas. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Industrial and Ventas.

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Can any of the company-specific risk be diversified away by investing in both First Industrial and Ventas at the same time? Although using correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combing First Industrial and Ventas into the same portfolio which is an essential part of fundamental portfolio management process.

Diversification Opportunities for First Industrial and Ventas

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Poor diversification

The 3 months correlation between First and Ventas is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding First Industrial Realty Trust and Ventas Inc in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Ventas Inc 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 Ventas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ventas Inc has no effect on the direction of First Industrial i.e. First Industrial and Ventas go up and down completely randomly.

Pair Corralation between First Industrial and Ventas

Allowing for the 30-days total investment horizon, First Industrial Realty is expected to under-perform the Ventas. But the stock apears to be less risky and, when comparing its historical volatility, First Industrial Realty is 2.44 times less risky than Ventas. The stock trades about 0.0 of its potential returns per unit of risk. The Ventas Inc is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  5,375  in Ventas Inc on May 3, 2020 and sell it today you would lose (1,763)  from holding Ventas Inc or give up 32.8% of portfolio value over 30 days.
Time Period3 Months [change]
DirectionMoves Together 
ValuesDaily Returns

First Industrial Realty Trust  vs.  Ventas Inc

 Performance (%) 
First Industrial Realty 

First Industrial Risk-Adjusted Performance

Over the last 30 days First Industrial Realty has generated negative risk-adjusted returns adding no value to investors with long positions. In defiance of relatively invariable forward-looking signals, First Industrial is not utilizing all of its potentials. The ongoing stock price agitation, may contribute to short term losses for the management.
Ventas Inc 

Ventas Risk-Adjusted Performance

Over the last 30 days Ventas Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In defiance of relatively unfluctuating forward-looking signals, Ventas may actually be approaching a critical reversion point that can send shares even higher in July 2020.

First Industrial and Ventas Volatility Contrast

 Predicted Return Density 
Check out your portfolio center. Please also try Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.

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