Correlation Between LXP Industrial and Prologis

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

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

Diversification Opportunities for LXP Industrial and Prologis

0.89

Correlation Coefficient

LXP Industrial  Prologis

Very poor diversification

The 3 months correlation between LXP and Prologis is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding LXP Industrial Trust and Prologis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prologis and LXP 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 LXP Industrial Trust 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 LXP Industrial i.e., LXP Industrial and Prologis go up and down completely randomly.

Pair Corralation between LXP Industrial and Prologis

Considering the 90-day investment horizon LXP Industrial Trust is expected to generate 0.84 times more return on investment than Prologis. However, LXP Industrial Trust is 1.2 times less risky than Prologis. It trades about -0.09 of its potential returns per unit of risk. Prologis is currently generating about -0.09 per unit of risk. If you would invest  1,019  in LXP Industrial Trust on September 4, 2024 and sell it today you would lose (76.00) from holding LXP Industrial Trust or give up 7.46% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

LXP Industrial Trust  vs.  Prologis

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 latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Prologis

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Prologis has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's essential indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with LXP Industrial and Prologis

The main advantage of trading using opposite LXP Industrial and Prologis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LXP 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 LXP Industrial Trust 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.