Correlation Between First Industrial and St Joe

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

Diversification Opportunities for First Industrial and St Joe

0.45

Correlation Coefficient

First Industrial  St Joe

Very weak diversification

The 3 months correlation between First and JOE is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding First Industrial Realty and St Joe Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on St Joe Company 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 St Joe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of St Joe Company has no effect on the direction of First Industrial i.e., First Industrial and St Joe go up and down completely randomly.

Pair Corralation between First Industrial and St Joe

Allowing for the 90-day total investment horizon First Industrial Realty is expected to generate 0.9 times more return on investment than St Joe. However, First Industrial Realty is 1.11 times less risky than St Joe. It trades about 0.09 of its potential returns per unit of risk. St Joe Company is currently generating about 0.04 per unit of risk. If you would invest  5,066  in First Industrial Realty on December 26, 2024 and sell it today you would earn a total of  344.00  from holding First Industrial Realty or generate 6.79% return on investment over 90 days.

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

First Industrial Realty  vs.  St Joe Company

First Industrial Realty

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in First Industrial Realty are ranked lower than 6 (%) 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.

St Joe Company

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in St Joe Company are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, St Joe is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with First Industrial and St Joe

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

The idea behind First Industrial Realty and St Joe Company 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.