Correlation Between STAG Industrial and Mapletree Industrial

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

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

Diversification Opportunities for STAG Industrial and Mapletree Industrial

0.27

Correlation Coefficient

STAG Industrial  Mapletree Industrial

Modest diversification

The 3 months correlation between STAG and Mapletree is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding STAG Industrial and Mapletree Industrial Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mapletree Industrial and STAG 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 STAG Industrial are associated (or correlated) with Mapletree Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mapletree Industrial has no effect on the direction of STAG Industrial i.e., STAG Industrial and Mapletree Industrial go up and down completely randomly.

Pair Corralation between STAG Industrial and Mapletree Industrial

Assuming the 90 days horizon STAG Industrial is expected to generate 1.12 times more return on investment than Mapletree Industrial. However, STAG Industrial is 1.12 times more volatile than Mapletree Industrial Trust. It trades about -0.05 of its potential returns per unit of risk. Mapletree Industrial Trust is currently generating about -0.13 per unit of risk. If you would invest  3,566  in STAG Industrial on September 14, 2024 and sell it today you would lose (161.00) from holding STAG Industrial or give up 4.51% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

STAG Industrial  vs.  Mapletree Industrial Trust

STAG Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days STAG Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, STAG Industrial is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Mapletree Industrial

Risk-Adjusted Performance

0 of 100

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.

Pair Trading with STAG Industrial and Mapletree Industrial

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

The idea behind STAG Industrial and Mapletree 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.

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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.