Correlation Between STAG Industrial and Prologis

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

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

Diversification Opportunities for STAG Industrial and Prologis

0.79

Correlation Coefficient

STAG Industrial  Prologis

Poor diversification

The 3 months correlation between STAG and Prologis is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding STAG Industrial and Prologis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prologis 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 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 STAG Industrial i.e., STAG Industrial and Prologis go up and down completely randomly.

Pair Corralation between STAG Industrial and Prologis

Assuming the 90 days horizon STAG Industrial is expected to generate 0.69 times more return on investment than Prologis. However, STAG Industrial is 1.45 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 per unit of risk. If you would invest  3,167  in STAG Industrial on December 29, 2024 and sell it today you would earn a total of  123.00  from holding STAG Industrial or generate 3.88% return on investment over 90 days.

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

STAG Industrial  vs.  Prologis

STAG Industrial

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in STAG Industrial are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, STAG Industrial is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Prologis

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Prologis are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable forward-looking indicators, Prologis is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with STAG Industrial and Prologis

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

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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.