Correlation Between LXP Industrial and Global Self

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

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

Diversification Opportunities for LXP Industrial and Global Self

0.02

Correlation Coefficient

LXP Industrial  Global Self

Significant diversification

The 3 months correlation between LXP and Global is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding LXP Industrial Trust and Global Self Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Self Storage and LXP 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 LXP Industrial Trust are associated (or correlated) with Global Self. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Self Storage has no effect on the direction of LXP Industrial i.e., LXP Industrial and Global Self go up and down completely randomly.

Pair Corralation between LXP Industrial and Global Self

Considering the 90-day investment horizon LXP Industrial Trust is expected to under-perform the Global Self. But the stock apears to be less risky and, when comparing its historical volatility, LXP Industrial Trust is 1.2 times less risky than Global Self. The stock trades about -0.09 of its potential returns per unit of risk. The Global Self Storage is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  514.00  in Global Self Storage on August 31, 2024 and sell it today you would earn a total of  1.00  from holding Global Self Storage or generate 0.19% return on investment over 90 days.

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

LXP Industrial Trust  vs.  Global Self Storage

LXP Industrial Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LXP Industrial Trust 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.

Global Self Storage

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Self Storage has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, Global Self is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with LXP Industrial and Global Self

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

The idea behind LXP Industrial Trust and Global Self Storage 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.