Correlation Between TT Electronics and First Industrial

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

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

Diversification Opportunities for TT Electronics and First Industrial

0.18

Correlation Coefficient

TT Electronics  First Industrial

Average diversification

The 3 months correlation between 7TT and First is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding TT Electronics PLC and First Industrial Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Industrial Realty and TT Electronics 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 TT Electronics PLC are associated (or correlated) with First Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Industrial Realty has no effect on the direction of TT Electronics i.e., TT Electronics and First Industrial go up and down completely randomly.

Pair Corralation between TT Electronics and First Industrial

Assuming the 90 days trading horizon TT Electronics PLC is expected to under-perform the First Industrial. But the stock apears to be less risky and, when comparing its historical volatility, TT Electronics PLC is 1.02 times less risky than First Industrial. The stock trades about -0.58 of its potential returns per unit of risk. The First Industrial Realty is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  4,783  in First Industrial Realty on October 25, 2024 and sell it today you would earn a total of  217.00  from holding First Industrial Realty or generate 4.54% return on investment over 90 days.

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

TT Electronics PLC  vs.  First Industrial Realty

TT Electronics PLC

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in TT Electronics PLC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, TT Electronics may actually be approaching a critical reversion point that can send shares even higher in February 2025.

First Industrial Realty

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in First Industrial Realty are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, First Industrial is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with TT Electronics and First Industrial

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

The idea behind TT Electronics PLC and First Industrial Realty 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.

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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.