Correlation Between LTC Properties and Rexford Industrial

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

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

Diversification Opportunities for LTC Properties and Rexford Industrial

0.22

Correlation Coefficient

LTC Properties  Rexford Industrial

Modest diversification

The 3 months correlation between LTC and Rexford is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding LTC Properties and Rexford Industrial Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rexford Industrial Realty and LTC Properties 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 LTC Properties are associated (or correlated) with Rexford Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rexford Industrial Realty has no effect on the direction of LTC Properties i.e., LTC Properties and Rexford Industrial go up and down completely randomly.

Pair Corralation between LTC Properties and Rexford Industrial

Considering the 90-day investment horizon LTC Properties is expected to generate 1.42 times less return on investment than Rexford Industrial. But when comparing it to its historical volatility, LTC Properties is 1.44 times less risky than Rexford Industrial. It trades about 0.05 of its potential returns per unit of risk. Rexford Industrial Realty is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  3,829  in Rexford Industrial Realty on December 27, 2024 and sell it today you would earn a total of  163.00  from holding Rexford Industrial Realty or generate 4.26% return on investment over 90 days.

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

LTC Properties  vs.  Rexford Industrial Realty

LTC Properties

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in LTC Properties are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, LTC Properties is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Rexford Industrial Realty

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Rexford Industrial Realty are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Rexford Industrial is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with LTC Properties and Rexford Industrial

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

The idea behind LTC Properties and Rexford 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.