Correlation Between Acadia Realty and First Industrial

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

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

Diversification Opportunities for Acadia Realty and First Industrial

-0.46

Correlation Coefficient

Acadia Realty  First Industrial

Very good diversification

The 3 months correlation between Acadia and First is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Acadia Realty Trust 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 Acadia 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 Acadia Realty Trust 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 Acadia Realty i.e., Acadia Realty and First Industrial go up and down completely randomly.

Pair Corralation between Acadia Realty and First Industrial

Considering the 90-day investment horizon Acadia Realty Trust is expected to generate 0.91 times more return on investment than First Industrial. However, Acadia Realty Trust is 1.1 times less risky than First Industrial. It trades about -0.28 of its potential returns per unit of risk. First Industrial Realty is currently generating about -0.27 per unit of risk. If you would invest  2,559  in Acadia Realty Trust on September 26, 2024 and sell it today you would lose (173.00) from holding Acadia Realty Trust or give up 6.76% of portfolio value over 90 days.

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

Acadia Realty Trust  vs.  First Industrial Realty

Acadia Realty Trust

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Acadia Realty Trust are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable forward-looking signals, Acadia Realty is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

First Industrial Realty

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Acadia Realty and First Industrial

The main advantage of trading using opposite Acadia Realty and First Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acadia Realty 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 Acadia Realty Trust 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.

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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.