Correlation Between First Industrial and Logistic Properties

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

Diversification Opportunities for First Industrial and Logistic Properties

-0.71

Correlation Coefficient

First Industrial  Logistic Properties

Pay attention - limited upside

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

Pair Corralation between First Industrial and Logistic Properties

Allowing for the 90-day total investment horizon First Industrial Realty is expected to generate 0.56 times more return on investment than Logistic Properties. However, First Industrial Realty is 1.77 times less risky than Logistic Properties. It trades about 0.15 of its potential returns per unit of risk. Logistic Properties of is currently generating about -0.06 per unit of risk. If you would invest  4,923  in First Industrial Realty on December 19, 2024 and sell it today you would earn a total of  593.00  from holding First Industrial Realty or generate 12.05% return on investment over 90 days.

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

First Industrial Realty  vs.  Logistic Properties of

First Industrial Realty

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in First Industrial Realty are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, First Industrial reported solid returns over the last few months and may actually be approaching a breakup point.

Logistic Properties

Risk-Adjusted Performance

Very Weak

Over the last 90 days Logistic Properties of has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with First Industrial and Logistic Properties

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

The idea behind First Industrial Realty and Logistic Properties of 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.