Correlation Between First Industrial and CKX Lands
Can any of the company-specific risk be diversified away by investing in both First Industrial and CKX Lands 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 CKX Lands 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 CKX Lands, you can compare the effects of market volatilities on First Industrial and CKX Lands 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 CKX Lands. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Industrial and CKX Lands.
Diversification Opportunities for First Industrial and CKX Lands
0.13 | Correlation Coefficient |
Average diversification
The 9 months correlation between First and CKX is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding First Industrial Realty and CKX Lands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CKX Lands 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 CKX Lands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CKX Lands has no effect on the direction of First Industrial i.e., First Industrial and CKX Lands go up and down completely randomly.
Pair Corralation between First Industrial and CKX Lands
Allowing for the 90-day total investment horizon First Industrial Realty is expected to under-perform the CKX Lands. But the stock apears to be less risky and, when comparing its historical volatility, First Industrial Realty is 2.36 times less risky than CKX Lands. The stock trades about -0.06 of its potential returns per unit of risk. The CKX Lands is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,378 in CKX Lands on March 8, 2024 and sell it today you would earn a total of 12.00 from holding CKX Lands or generate 0.87% return on investment over 90 days.
Time Period | 9 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 95.24% |
Values | Daily Returns |
First Industrial Realty vs. CKX Lands
Performance |
Timeline |
First Industrial Realty |
CKX Lands |
First Industrial and CKX Lands Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with First Industrial and CKX Lands
The main advantage of trading using opposite First Industrial and CKX Lands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Industrial position performs unexpectedly, CKX Lands 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 CKX Lands will offset losses from the drop in CKX Lands' long position.The idea behind First Industrial Realty and CKX Lands 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.CKX Lands vs. PrimeEnergy | CKX Lands vs. MorningStar Partners LP | CKX Lands vs. XXL Energy Corp | CKX Lands vs. SilverBow Resources |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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