Correlation Between LXP Industrial and Ventas

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

Diversification Opportunities for LXP Industrial and Ventas

0.91

Correlation Coefficient

LXP Industrial  Ventas

Almost no diversification

The 3 months correlation between LXP and Ventas is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding LXP Industrial Trust and Ventas Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ventas Inc 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 Ventas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ventas Inc has no effect on the direction of LXP Industrial i.e., LXP Industrial and Ventas go up and down completely randomly.

Pair Corralation between LXP Industrial and Ventas

Considering the 90-day investment horizon LXP Industrial is expected to generate 1.62 times less return on investment than Ventas. But when comparing it to its historical volatility, LXP Industrial Trust is 1.12 times less risky than Ventas. It trades about 0.11 of its potential returns per unit of risk. Ventas Inc is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  5,844  in Ventas Inc on December 27, 2024 and sell it today you would earn a total of  974.00  from holding Ventas Inc or generate 16.67% return on investment over 90 days.

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

LXP Industrial Trust  vs.  Ventas Inc

LXP Industrial Trust

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in LXP Industrial Trust are ranked lower than 8 (%) 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.

Ventas Inc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ventas Inc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Ventas reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with LXP Industrial and Ventas

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

The idea behind LXP Industrial Trust and Ventas Inc 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.