Correlation Between Rexford Industrial and Riocan REIT

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

By analyzing existing cross correlation between Rexford Industrial Realty and Riocan REIT, you can compare the effects of market volatilities on Rexford Industrial and Riocan REIT 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 Rexford Industrial with a short position of Riocan REIT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rexford Industrial and Riocan REIT.

Diversification Opportunities for Rexford Industrial and Riocan REIT

0.7

Correlation Coefficient

Rexford Industrial  Riocan REIT

Poor diversification

The 3 months correlation between Rexford and Riocan is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Rexford Industrial Realty and Riocan REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Riocan REIT and Rexford 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 Rexford Industrial Realty are associated (or correlated) with Riocan REIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Riocan REIT has no effect on the direction of Rexford Industrial i.e., Rexford Industrial and Riocan REIT go up and down completely randomly.

Pair Corralation between Rexford Industrial and Riocan REIT

Given the investment horizon of 90 days Rexford Industrial Realty is expected to under-perform the Riocan REIT. In addition to that, Rexford Industrial is 1.12 times more volatile than Riocan REIT. It trades about -0.04 of its total potential returns per unit of risk. Riocan REIT is currently generating about -0.01 per unit of volatility. If you would invest  1,394  in Riocan REIT on March 9, 2024 and sell it today you would lose (101.00) from holding Riocan REIT or give up 7.25% of portfolio value over 90 days.

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

Rexford Industrial Realty  vs.  Riocan REIT

Rexford Industrial Realty

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rexford Industrial Realty has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in July 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Riocan REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Riocan REIT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Riocan REIT is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Rexford Industrial and Riocan REIT

The main advantage of trading using opposite Rexford Industrial and Riocan REIT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rexford Industrial position performs unexpectedly, Riocan REIT 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 Riocan REIT will offset losses from the drop in Riocan REIT's long position.

The idea behind Rexford Industrial Realty and Riocan REIT 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.