Correlation Between Terreno Realty and Rexford Industrial

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

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

Diversification Opportunities for Terreno Realty and Rexford Industrial

0.12

Correlation Coefficient

Terreno Realty  Rexford Industrial

Average diversification

The 3 months correlation between Terreno and Rexford is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Terreno Realty and Rexford Industrial Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rexford Industrial Realty and Terreno Realty 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 Terreno Realty are associated (or correlated) with Rexford Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rexford Industrial Realty has no effect on the direction of Terreno Realty i.e., Terreno Realty and Rexford Industrial go up and down completely randomly.

Pair Corralation between Terreno Realty and Rexford Industrial

Given the investment horizon of 90 days Terreno Realty is expected to under-perform the Rexford Industrial. In addition to that, Terreno Realty is 2.01 times more volatile than Rexford Industrial Realty. It trades about -0.14 of its total potential returns per unit of risk. Rexford Industrial Realty is currently generating about 0.05 per unit of volatility. If you would invest  2,268  in Rexford Industrial Realty on September 2, 2024 and sell it today you would earn a total of  42.00  from holding Rexford Industrial Realty or generate 1.85% return on investment over 90 days.

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

Terreno Realty  vs.  Rexford Industrial Realty

Terreno Realty

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Terreno Realty has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Rexford Industrial Realty

Risk-Adjusted Performance

3 of 100

Insignificant

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

Pair Trading with Terreno Realty and Rexford Industrial

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

The idea behind Terreno Realty and Rexford Industrial Realty 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.

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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.