Correlation Between First Industrial and Associated Capital

Can any of the company-specific risk be diversified away by investing in both First Industrial and Associated Capital 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 Associated Capital 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 Associated Capital Group, you can compare the effects of market volatilities on First Industrial and Associated Capital 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 Associated Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Industrial and Associated Capital.

Diversification Opportunities for First Industrial and Associated Capital

0.62

Correlation Coefficient

First Industrial  Associated Capital

Poor diversification

The 3 months correlation between First and Associated is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding First Industrial Realty and Associated Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Associated Capital 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 Associated Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Associated Capital has no effect on the direction of First Industrial i.e., First Industrial and Associated Capital go up and down completely randomly.

Pair Corralation between First Industrial and Associated Capital

Allowing for the 90-day total investment horizon First Industrial Realty is expected to generate 0.76 times more return on investment than Associated Capital. However, First Industrial Realty is 1.31 times less risky than Associated Capital. It trades about 0.11 of its potential returns per unit of risk. Associated Capital Group is currently generating about 0.08 per unit of risk. If you would invest  4,971  in First Industrial Realty on December 28, 2024 and sell it today you would earn a total of  454.00  from holding First Industrial Realty or generate 9.13% return on investment over 90 days.

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

First Industrial Realty  vs.  Associated Capital Group

First Industrial Realty

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in First Industrial Realty are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, First Industrial may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Associated Capital

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Associated Capital Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, Associated Capital may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with First Industrial and Associated Capital

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

The idea behind First Industrial Realty and Associated Capital Group 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.