Correlation Between Eerly Govt and EastGroup Properties

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

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

Diversification Opportunities for Eerly Govt and EastGroup Properties

-0.46

Correlation Coefficient

Eerly Govt  EastGroup Properties

Very good diversification

The 3 months correlation between Eerly and EastGroup is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Eerly Govt Ppty and EastGroup Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EastGroup Properties and Eerly Govt 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 Eerly Govt Ppty 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 Eerly Govt i.e., Eerly Govt and EastGroup Properties go up and down completely randomly.

Pair Corralation between Eerly Govt and EastGroup Properties

Considering the 90-day investment horizon Eerly Govt Ppty is expected to under-perform the EastGroup Properties. In addition to that, Eerly Govt is 1.29 times more volatile than EastGroup Properties. It trades about -0.02 of its total potential returns per unit of risk. EastGroup Properties is currently generating about 0.13 per unit of volatility. If you would invest  16,004  in EastGroup Properties on December 20, 2024 and sell it today you would earn a total of  1,683  from holding EastGroup Properties or generate 10.52% return on investment over 90 days.

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

Eerly Govt Ppty  vs.  EastGroup Properties

Eerly Govt Ppty

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eerly Govt Ppty has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Eerly Govt is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

EastGroup Properties

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in EastGroup Properties are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating technical and fundamental indicators, EastGroup Properties may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Eerly Govt and EastGroup Properties

The main advantage of trading using opposite Eerly Govt and EastGroup Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eerly Govt 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 Eerly Govt Ppty 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.

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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.