Correlation Between Prologis and LXP Industrial

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

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

Diversification Opportunities for Prologis and LXP Industrial

-0.36

Correlation Coefficient

Prologis  LXP Industrial

Very good diversification

The 3 months correlation between Prologis and LXP is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Prologis and LXP Industrial Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LXP Industrial Trust and Prologis 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 Prologis are associated (or correlated) with LXP Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LXP Industrial Trust has no effect on the direction of Prologis i.e., Prologis and LXP Industrial go up and down completely randomly.

Pair Corralation between Prologis and LXP Industrial

Assuming the 90 days horizon Prologis is expected to under-perform the LXP Industrial. But the otc stock apears to be less risky and, when comparing its historical volatility, Prologis is 1.18 times less risky than LXP Industrial. The otc stock trades about -0.01 of its potential returns per unit of risk. The LXP Industrial Trust is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  804.00  in LXP Industrial Trust on December 28, 2024 and sell it today you would earn a total of  77.00  from holding LXP Industrial Trust or generate 9.58% return on investment over 90 days.

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

Prologis  vs.  LXP Industrial Trust

Prologis

Risk-Adjusted Performance

Very Weak

Over the last 90 days Prologis has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Prologis is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

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.

Pair Trading with Prologis and LXP Industrial

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

The idea behind Prologis and LXP Industrial Trust 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.