Correlation Between Ventas and LXP Industrial

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

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

Diversification Opportunities for Ventas and LXP Industrial

0.83

Correlation Coefficient

Ventas  LXP Industrial

Very poor diversification

The 3 months correlation between Ventas and LXP is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Ventas Inc and LXP Industrial Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LXP Industrial Trust and Ventas 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 Ventas Inc are associated (or correlated) with LXP Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LXP Industrial Trust has no effect on the direction of Ventas i.e., Ventas and LXP Industrial go up and down completely randomly.

Pair Corralation between Ventas and LXP Industrial

Considering the 90-day investment horizon Ventas Inc is expected to generate 0.95 times more return on investment than LXP Industrial. However, Ventas Inc is 1.06 times less risky than LXP Industrial. It trades about 0.09 of its potential returns per unit of risk. LXP Industrial Trust is currently generating about 0.02 per unit of risk. If you would invest  4,098  in Ventas Inc on October 6, 2024 and sell it today you would earn a total of  1,733  from holding Ventas Inc or generate 42.29% return on investment over 90 days.

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

Ventas Inc  vs.  LXP Industrial Trust

Ventas Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ventas Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Ventas is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

LXP Industrial Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LXP Industrial Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Ventas and LXP Industrial

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

The idea behind Ventas Inc and LXP 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.

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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.