Correlation Between LXP Industrial and Welltower

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

Diversification Opportunities for LXP Industrial and Welltower

0.84

Correlation Coefficient

LXP Industrial  Welltower

Very poor diversification

The 3 months correlation between LXP and Welltower is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding LXP Industrial Trust and Welltower in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Welltower 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 Welltower. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Welltower has no effect on the direction of LXP Industrial i.e., LXP Industrial and Welltower go up and down completely randomly.

Pair Corralation between LXP Industrial and Welltower

Considering the 90-day investment horizon LXP Industrial is expected to generate 2.36 times less return on investment than Welltower. In addition to that, LXP Industrial is 1.06 times more volatile than Welltower. It trades about 0.1 of its total potential returns per unit of risk. Welltower is currently generating about 0.24 per unit of volatility. If you would invest  12,436  in Welltower on December 28, 2024 and sell it today you would earn a total of  2,906  from holding Welltower or generate 23.37% return on investment over 90 days.

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

LXP Industrial Trust  vs.  Welltower

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 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.

Welltower

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Welltower are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite quite weak essential indicators, Welltower disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with LXP Industrial and Welltower

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

The idea behind LXP Industrial Trust and Welltower 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.