Correlation Between First Industrial and CTO Realty

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

Diversification Opportunities for First Industrial and CTO Realty

-0.55

Correlation Coefficient

First Industrial  CTO Realty

Excellent diversification

The 3 months correlation between First and CTO is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding First Industrial Realty and CTO Realty Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CTO Realty Growth 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 CTO Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CTO Realty Growth has no effect on the direction of First Industrial i.e., First Industrial and CTO Realty go up and down completely randomly.

Pair Corralation between First Industrial and CTO Realty

Allowing for the 90-day total investment horizon First Industrial Realty is expected to generate 0.93 times more return on investment than CTO Realty. However, First Industrial Realty is 1.07 times less risky than CTO Realty. It trades about 0.12 of its potential returns per unit of risk. CTO Realty Growth is currently generating about 0.09 per unit of risk. If you would invest  4,602  in First Industrial Realty on August 30, 2024 and sell it today you would earn a total of  806.00  from holding First Industrial Realty or generate 17.51% return on investment over 90 days.

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

First Industrial Realty  vs.  CTO Realty Growth

First Industrial Realty

Risk-Adjusted Performance

0 of 100

Very Weak

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

CTO Realty Growth

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CTO Realty Growth are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, CTO Realty is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with First Industrial and CTO Realty

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

The idea behind First Industrial Realty and CTO Realty Growth 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.