Correlation Between LXP Industrial and SL Green

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

Diversification Opportunities for LXP Industrial and SL Green

-0.66

Correlation Coefficient

LXP Industrial  SL Green

Excellent diversification

The 3 months correlation between LXP and SLG is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding LXP Industrial Trust and SL Green Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SL Green Realty 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 SL Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SL Green Realty has no effect on the direction of LXP Industrial i.e., LXP Industrial and SL Green go up and down completely randomly.

Pair Corralation between LXP Industrial and SL Green

Considering the 90-day investment horizon LXP Industrial is expected to generate 3.14 times less return on investment than SL Green. But when comparing it to its historical volatility, LXP Industrial Trust is 1.55 times less risky than SL Green. It trades about 0.02 of its potential returns per unit of risk. SL Green Realty is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  5,067  in SL Green Realty on December 26, 2024 and sell it today you would earn a total of  847.00  from holding SL Green Realty or generate 16.72% return on investment over 90 days.

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

LXP Industrial Trust  vs.  SL Green Realty

LXP Industrial Trust

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in LXP Industrial Trust are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, LXP Industrial may actually be approaching a critical reversion point that can send shares even higher in April 2025.

SL Green Realty

Risk-Adjusted Performance

Very Weak

Over the last 90 days SL Green Realty has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's essential indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with LXP Industrial and SL Green

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

The idea behind LXP Industrial Trust and SL Green 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.