Correlation Between Rexford Industrial and CubeSmart

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

Diversification Opportunities for Rexford Industrial and CubeSmart

0.33

Correlation Coefficient

Rexford Industrial  CubeSmart

Weak diversification

The 3 months correlation between Rexford and CubeSmart is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Rexford Industrial Realty and CubeSmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CubeSmart 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 CubeSmart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CubeSmart has no effect on the direction of Rexford Industrial i.e., Rexford Industrial and CubeSmart go up and down completely randomly.

Pair Corralation between Rexford Industrial and CubeSmart

Given the investment horizon of 90 days Rexford Industrial Realty is expected to generate 1.21 times more return on investment than CubeSmart. However, Rexford Industrial is 1.21 times more volatile than CubeSmart. It trades about 0.04 of its potential returns per unit of risk. CubeSmart is currently generating about 0.01 per unit of risk. If you would invest  3,829  in Rexford Industrial Realty on December 30, 2024 and sell it today you would earn a total of  113.00  from holding Rexford Industrial Realty or generate 2.95% return on investment over 90 days.

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

Rexford Industrial Realty  vs.  CubeSmart

Rexford Industrial Realty

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Rexford Industrial Realty are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Rexford Industrial is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

CubeSmart

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CubeSmart are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental drivers, CubeSmart is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Rexford Industrial and CubeSmart

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

The idea behind Rexford Industrial Realty and CubeSmart 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.