Correlation Between Innovative Industrial and Americold Realty

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

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

Diversification Opportunities for Innovative Industrial and Americold Realty

0.73

Correlation Coefficient

Innovative Industrial  Americold Realty

Poor diversification

The 3 months correlation between Innovative and Americold is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Innovative Industrial Properti and Americold Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Americold Realty Trust and Innovative 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 Innovative Industrial Properties are associated (or correlated) with Americold Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Americold Realty Trust has no effect on the direction of Innovative Industrial i.e., Innovative Industrial and Americold Realty go up and down completely randomly.

Pair Corralation between Innovative Industrial and Americold Realty

Given the investment horizon of 90 days Innovative Industrial Properties is expected to generate 1.33 times more return on investment than Americold Realty. However, Innovative Industrial is 1.33 times more volatile than Americold Realty Trust. It trades about -0.06 of its potential returns per unit of risk. Americold Realty Trust is currently generating about -0.17 per unit of risk. If you would invest  12,081  in Innovative Industrial Properties on August 31, 2024 and sell it today you would lose (1,164) from holding Innovative Industrial Properties or give up 9.63% of portfolio value over 90 days.

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

Innovative Industrial Properti  vs.  Americold Realty Trust

Innovative Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Innovative Industrial Properties has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unsteady 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.

Americold Realty Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Americold Realty Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's essential indicators remain rather sound which may send shares a bit higher in December 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Innovative Industrial and Americold Realty

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

The idea behind Innovative Industrial Properties and Americold Realty Trust 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.