Correlation Between Global Medical and First Industrial

Can any of the company-specific risk be diversified away by investing in both Global Medical and First Industrial 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 Global Medical and First Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Global Medical REIT and First Industrial Realty, you can compare the effects of market volatilities on Global Medical and First Industrial 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 Global Medical with a short position of First Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Medical and First Industrial.

Diversification Opportunities for Global Medical and First Industrial

0.92

Correlation Coefficient

Global Medical  First Industrial

Almost no diversification

The 3 months correlation between Global and First is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Global Medical REIT and First Industrial Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Industrial Realty and Global Medical 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 Global Medical REIT are associated (or correlated) with First Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Industrial Realty has no effect on the direction of Global Medical i.e., Global Medical and First Industrial go up and down completely randomly.

Pair Corralation between Global Medical and First Industrial

Given the investment horizon of 90 days Global Medical REIT is expected to under-perform the First Industrial. In addition to that, Global Medical is 1.08 times more volatile than First Industrial Realty. It trades about -0.32 of its total potential returns per unit of risk. First Industrial Realty is currently generating about -0.09 per unit of volatility. If you would invest  5,165  in First Industrial Realty on October 6, 2024 and sell it today you would lose (143.00) from holding First Industrial Realty or give up 2.77% of portfolio value over 90 days.

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

Global Medical REIT  vs.  First Industrial Realty

Global Medical REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Medical REIT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

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.

Pair Trading with Global Medical and First Industrial

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

The idea behind Global Medical REIT and First Industrial Realty 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.