Correlation Between Plymouth Industrial and Rexford Industrial

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

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

Diversification Opportunities for Plymouth Industrial and Rexford Industrial

0.12

Correlation Coefficient

Plymouth Industrial  Rexford Industrial

Average diversification

The 3 months correlation between Plymouth and Rexford is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Plymouth Industrial REIT and Rexford Industrial Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rexford Industrial Realty and Plymouth 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 Plymouth Industrial REIT are associated (or correlated) with Rexford Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rexford Industrial Realty has no effect on the direction of Plymouth Industrial i.e., Plymouth Industrial and Rexford Industrial go up and down completely randomly.

Pair Corralation between Plymouth Industrial and Rexford Industrial

Given the investment horizon of 90 days Plymouth Industrial REIT is expected to under-perform the Rexford Industrial. In addition to that, Plymouth Industrial is 2.37 times more volatile than Rexford Industrial Realty. It trades about -0.22 of its total potential returns per unit of risk. Rexford Industrial Realty is currently generating about 0.04 per unit of volatility. If you would invest  2,268  in Rexford Industrial Realty on August 31, 2024 and sell it today you would earn a total of  35.00  from holding Rexford Industrial Realty or generate 1.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Plymouth Industrial REIT  vs.  Rexford Industrial Realty

Plymouth Industrial REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Plymouth Industrial REIT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Rexford Industrial Realty

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Rexford Industrial Realty are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, Rexford Industrial is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Plymouth Industrial and Rexford Industrial

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

The idea behind Plymouth Industrial REIT and Rexford Industrial 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.