Correlation Between Americold Realty and First Industrial

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

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

Diversification Opportunities for Americold Realty and First Industrial

0.86

Correlation Coefficient

Americold Realty  First Industrial

Very poor diversification

The 3 months correlation between Americold and First is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Americold Realty Trust and First Industrial Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Industrial Realty and Americold 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 Americold Realty Trust are associated (or correlated) with First Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Industrial Realty has no effect on the direction of Americold Realty i.e., Americold Realty and First Industrial go up and down completely randomly.

Pair Corralation between Americold Realty and First Industrial

Given the investment horizon of 90 days Americold Realty Trust is expected to under-perform the First Industrial. In addition to that, Americold Realty is 1.16 times more volatile than First Industrial Realty. It trades about -0.01 of its total potential returns per unit of risk. First Industrial Realty is currently generating about 0.03 per unit of volatility. If you would invest  4,732  in First Industrial Realty on August 25, 2024 and sell it today you would earn a total of  643.00  from holding First Industrial Realty or generate 13.59% return on investment over 90 days.

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

Americold Realty Trust  vs.  First Industrial Realty

Americold Realty Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Americold Realty Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's essential indicators remain rather sound which may send shares a bit higher in December 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

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.

Pair Trading with Americold Realty and First Industrial

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

The idea behind Americold Realty Trust and First 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.