Correlation Between American Assets and EPR Properties

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

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

Diversification Opportunities for American Assets and EPR Properties

-0.9

Correlation Coefficient

American Assets  EPR Properties

Pay attention - limited upside

The 3 months correlation between American and EPR is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding American Assets Trust and EPR Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EPR Properties and American Assets 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 American Assets Trust are associated (or correlated) with EPR Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EPR Properties has no effect on the direction of American Assets i.e., American Assets and EPR Properties go up and down completely randomly.

Pair Corralation between American Assets and EPR Properties

Considering the 90-day investment horizon American Assets Trust is expected to under-perform the EPR Properties. In addition to that, American Assets is 1.45 times more volatile than EPR Properties. It trades about -0.21 of its total potential returns per unit of risk. EPR Properties is currently generating about 0.24 per unit of volatility. If you would invest  4,311  in EPR Properties on December 27, 2024 and sell it today you would earn a total of  818.00  from holding EPR Properties or generate 18.97% return on investment over 90 days.

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

American Assets Trust  vs.  EPR Properties

American Assets Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days American Assets Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

EPR Properties

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in EPR Properties are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, EPR Properties reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with American Assets and EPR Properties

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

The idea behind American Assets Trust and EPR Properties 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.