Correlation Between Mapletree Industrial and Prologis

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

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

Diversification Opportunities for Mapletree Industrial and Prologis

-0.57

Correlation Coefficient

Mapletree Industrial  Prologis

Excellent diversification

The 3 months correlation between Mapletree and Prologis is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Mapletree Industrial Trust and Prologis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prologis and Mapletree 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 Mapletree Industrial Trust are associated (or correlated) with Prologis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prologis has no effect on the direction of Mapletree Industrial i.e., Mapletree Industrial and Prologis go up and down completely randomly.

Pair Corralation between Mapletree Industrial and Prologis

Assuming the 90 days horizon Mapletree Industrial Trust is expected to under-perform the Prologis. In addition to that, Mapletree Industrial is 1.38 times more volatile than Prologis. It trades about -0.08 of its total potential returns per unit of risk. Prologis is currently generating about 0.09 per unit of volatility. If you would invest  10,952  in Prologis on December 3, 2024 and sell it today you would earn a total of  904.00  from holding Prologis or generate 8.25% return on investment over 90 days.

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

Mapletree Industrial Trust  vs.  Prologis

Mapletree Industrial

Risk-Adjusted Performance

Very Weak

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

Prologis

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Prologis are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady forward-looking indicators, Prologis may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Mapletree Industrial and Prologis

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

The idea behind Mapletree Industrial Trust and Prologis 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .