Correlation Between Rexford Industrial and Prologis

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

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

Diversification Opportunities for Rexford Industrial and Prologis

-0.54

Correlation Coefficient

Rexford Industrial  Prologis

Excellent diversification

The 3 months correlation between Rexford and Prologis is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Rexford Industrial Realty and Prologis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prologis and Rexford 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 Rexford Industrial Realty 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 Rexford Industrial i.e., Rexford Industrial and Prologis go up and down completely randomly.

Pair Corralation between Rexford Industrial and Prologis

Assuming the 90 days trading horizon Rexford Industrial is expected to generate 1.45 times less return on investment than Prologis. But when comparing it to its historical volatility, Rexford Industrial Realty is 3.05 times less risky than Prologis. It trades about 0.06 of its potential returns per unit of risk. Prologis is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  5,376  in Prologis on August 31, 2024 and sell it today you would earn a total of  524.00  from holding Prologis or generate 9.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	92.0%
Values	Daily Returns

Rexford Industrial Realty  vs.  Prologis

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.

Prologis

Risk-Adjusted Performance

0 of 100

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 latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Rexford Industrial and Prologis

The main advantage of trading using opposite Rexford Industrial and Prologis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rexford 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 Rexford Industrial Realty 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.

Check out your portfolio center.

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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.