Correlation Between First Industrial and American Century

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

Diversification Opportunities for First Industrial and American Century

0.7

Correlation Coefficient

First Industrial  American Century

Poor diversification

The 3 months correlation between First and American is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding First Industrial Realty and American Century Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Century 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 American Century. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Century Real has no effect on the direction of First Industrial i.e., First Industrial and American Century go up and down completely randomly.

Pair Corralation between First Industrial and American Century

Allowing for the 90-day total investment horizon First Industrial Realty is expected to generate 1.12 times more return on investment than American Century. However, First Industrial is 1.12 times more volatile than American Century Real. It trades about -0.09 of its potential returns per unit of risk. American Century Real is currently generating about -0.14 per unit of risk. If you would invest  5,266  in First Industrial Realty on October 6, 2024 and sell it today you would lose (244.00) from holding First Industrial Realty or give up 4.63% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	97.62%
Values	Daily Returns

First Industrial Realty  vs.  American Century 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 latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

American Century Real

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days American Century Real has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, American Century 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 American Century

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

The idea behind First Industrial Realty and American Century 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.

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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.