Correlation Between LXP Industrial and CompoSecure

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

Diversification Opportunities for LXP Industrial and CompoSecure

0.69

Correlation Coefficient

LXP Industrial  CompoSecure

Poor diversification

The 3 months correlation between LXP and CompoSecure is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding LXP Industrial Trust and CompoSecure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CompoSecure 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 CompoSecure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CompoSecure has no effect on the direction of LXP Industrial i.e., LXP Industrial and CompoSecure go up and down completely randomly.

Pair Corralation between LXP Industrial and CompoSecure

Considering the 90-day investment horizon LXP Industrial Trust is expected to under-perform the CompoSecure. But the stock apears to be less risky and, when comparing its historical volatility, LXP Industrial Trust is 2.56 times less risky than CompoSecure. The stock trades about -0.02 of its potential returns per unit of risk. The CompoSecure is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  402.00  in CompoSecure on May 2, 2025 and sell it today you would earn a total of  213.00  from holding CompoSecure or generate 52.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

LXP Industrial Trust  vs.  CompoSecure

LXP Industrial Trust

Risk-Adjusted Performance

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 relatively invariable basic indicators, LXP Industrial is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

CompoSecure

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CompoSecure are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, CompoSecure showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with LXP Industrial and CompoSecure

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

The idea behind LXP Industrial Trust and CompoSecure 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.