Correlation Between First Industrial and Prudential Real

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

Diversification Opportunities for First Industrial and Prudential Real

0.05

Correlation Coefficient

First Industrial  Prudential Real

Significant diversification

The 3 months correlation between First and Prudential is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding First Industrial Realty and Prudential Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Real Estate 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 Prudential Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Real Estate has no effect on the direction of First Industrial i.e., First Industrial and Prudential Real go up and down completely randomly.

Pair Corralation between First Industrial and Prudential Real

Allowing for the 90-day total investment horizon First Industrial Realty is expected to under-perform the Prudential Real. In addition to that, First Industrial is 1.61 times more volatile than Prudential Real Estate. It trades about -0.09 of its total potential returns per unit of risk. Prudential Real Estate is currently generating about 0.1 per unit of volatility. If you would invest  787.00  in Prudential Real Estate on September 4, 2024 and sell it today you would earn a total of  31.00  from holding Prudential Real Estate or generate 3.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

First Industrial Realty  vs.  Prudential Real Estate

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.

Prudential Real Estate

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Prudential Real Estate are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Prudential Real is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with First Industrial and Prudential Real

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

The idea behind First Industrial Realty and Prudential Real Estate 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 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.