Correlation Between American Healthcare and EastGroup Properties

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

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

Diversification Opportunities for American Healthcare and EastGroup Properties

-0.59

Correlation Coefficient

American Healthcare  EastGroup Properties

Excellent diversification

The 3 months correlation between American and EastGroup is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding American Healthcare REIT, and EastGroup Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EastGroup Properties and American Healthcare 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 Healthcare REIT, are associated (or correlated) with EastGroup Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EastGroup Properties has no effect on the direction of American Healthcare i.e., American Healthcare and EastGroup Properties go up and down completely randomly.

Pair Corralation between American Healthcare and EastGroup Properties

Considering the 90-day investment horizon American Healthcare REIT, is expected to generate 0.89 times more return on investment than EastGroup Properties. However, American Healthcare REIT, is 1.13 times less risky than EastGroup Properties. It trades about -0.07 of its potential returns per unit of risk. EastGroup Properties is currently generating about -0.14 per unit of risk. If you would invest  2,835  in American Healthcare REIT, on September 22, 2024 and sell it today you would lose (60.00) from holding American Healthcare REIT, or give up 2.12% of portfolio value over 90 days.

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

American Healthcare REIT,  vs.  EastGroup Properties

American Healthcare REIT,

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in American Healthcare REIT, are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile technical indicators, American Healthcare may actually be approaching a critical reversion point that can send shares even higher in January 2025.

EastGroup Properties

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EastGroup Properties has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with American Healthcare and EastGroup Properties

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

The idea behind American Healthcare REIT, and EastGroup 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.