Correlation Between Arbor Realty and LXP Industrial

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

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

Diversification Opportunities for Arbor Realty and LXP Industrial

-0.71

Correlation Coefficient

Arbor Realty  LXP Industrial

Pay attention - limited upside

The 3 months correlation between Arbor and LXP is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Arbor Realty Trust and LXP Industrial Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LXP Industrial Trust and Arbor Realty 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 Arbor Realty Trust are associated (or correlated) with LXP Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LXP Industrial Trust has no effect on the direction of Arbor Realty i.e., Arbor Realty and LXP Industrial go up and down completely randomly.

Pair Corralation between Arbor Realty and LXP Industrial

Considering the 90-day investment horizon Arbor Realty Trust is expected to under-perform the LXP Industrial. In addition to that, Arbor Realty is 1.46 times more volatile than LXP Industrial Trust. It trades about -0.06 of its total potential returns per unit of risk. LXP Industrial Trust is currently generating about 0.09 per unit of volatility. If you would invest  818.00  in LXP Industrial Trust on December 26, 2024 and sell it today you would earn a total of  70.00  from holding LXP Industrial Trust or generate 8.56% return on investment over 90 days.

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

Arbor Realty Trust  vs.  LXP Industrial Trust

Arbor Realty Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Arbor Realty Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's fundamental drivers remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

LXP Industrial Trust

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in LXP Industrial Trust are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, LXP Industrial may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Arbor Realty and LXP Industrial

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

The idea behind Arbor Realty Trust and LXP Industrial Trust 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.