Correlation Between First Industrial and Warehouses
Can any of the company-specific risk be diversified away by investing in both First Industrial and Warehouses 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 First Industrial and Warehouses into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Industrial Realty and Warehouses De Pauw, you can compare the effects of market volatilities on First Industrial and Warehouses 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 First Industrial with a short position of Warehouses. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Industrial and Warehouses.
Diversification Opportunities for First Industrial and Warehouses
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between First and Warehouses is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding First Industrial Realty and Warehouses De Pauw in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Warehouses De Pauw and First 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 First Industrial Realty are associated (or correlated) with Warehouses. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Warehouses De Pauw has no effect on the direction of First Industrial i.e., First Industrial and Warehouses go up and down completely randomly.
Pair Corralation between First Industrial and Warehouses
Assuming the 90 days horizon First Industrial Realty is expected to generate 0.87 times more return on investment than Warehouses. However, First Industrial Realty is 1.15 times less risky than Warehouses. It trades about -0.25 of its potential returns per unit of risk. Warehouses De Pauw is currently generating about -0.31 per unit of risk. If you would invest 5,150 in First Industrial Realty on September 26, 2024 and sell it today you would lose (310.00) from holding First Industrial Realty or give up 6.02% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
First Industrial Realty vs. Warehouses De Pauw
Performance |
Timeline |
First Industrial Realty |
Warehouses De Pauw |
First Industrial and Warehouses Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with First Industrial and Warehouses
The main advantage of trading using opposite First Industrial and Warehouses positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Industrial position performs unexpectedly, Warehouses 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 Warehouses will offset losses from the drop in Warehouses' long position.First Industrial vs. Extra Space Storage | First Industrial vs. Warehouses De Pauw | First Industrial vs. National Storage Affiliates | First Industrial vs. Montea Comm VA |
Warehouses vs. Extra Space Storage | Warehouses vs. First Industrial Realty | Warehouses vs. National Storage Affiliates | Warehouses vs. Montea Comm VA |
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.
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