Correlation Between First Industrial and Cohen Steers

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

Diversification Opportunities for First Industrial and Cohen Steers

0.78

Correlation Coefficient

First Industrial  Cohen Steers

Poor diversification

The 3 months correlation between First and Cohen is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding First Industrial Realty and Cohen Steers Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cohen Steers Real 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 Cohen Steers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cohen Steers Real has no effect on the direction of First Industrial i.e., First Industrial and Cohen Steers go up and down completely randomly.

Pair Corralation between First Industrial and Cohen Steers

Allowing for the 90-day total investment horizon First Industrial Realty is expected to generate 1.56 times more return on investment than Cohen Steers. However, First Industrial is 1.56 times more volatile than Cohen Steers Real. It trades about 0.02 of its potential returns per unit of risk. Cohen Steers Real is currently generating about -0.16 per unit of risk. If you would invest  5,265  in First Industrial Realty on September 17, 2024 and sell it today you would earn a total of  15.00  from holding First Industrial Realty or generate 0.28% 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.  Cohen Steers Real

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 relatively invariable basic indicators, First Industrial is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Cohen Steers Real

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cohen Steers Real has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Cohen Steers is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with First Industrial and Cohen Steers

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

The idea behind First Industrial Realty and Cohen Steers Real 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 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.