Correlation Between Ecovyst and EastGroup Properties

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

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

Diversification Opportunities for Ecovyst and EastGroup Properties

-0.2

Correlation Coefficient

Ecovyst  EastGroup Properties

Good diversification

The 3 months correlation between Ecovyst and EastGroup is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Ecovyst and EastGroup Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EastGroup Properties and Ecovyst 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 Ecovyst 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 Ecovyst i.e., Ecovyst and EastGroup Properties go up and down completely randomly.

Pair Corralation between Ecovyst and EastGroup Properties

Given the investment horizon of 90 days Ecovyst is expected to under-perform the EastGroup Properties. In addition to that, Ecovyst is 1.98 times more volatile than EastGroup Properties. It trades about -0.04 of its total potential returns per unit of risk. EastGroup Properties is currently generating about 0.15 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  1,923  from holding EastGroup Properties or generate 12.02% return on investment over 90 days.

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

Ecovyst  vs.  EastGroup Properties

Ecovyst

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ecovyst has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

EastGroup Properties

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in EastGroup Properties are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating technical and fundamental indicators, EastGroup Properties reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ecovyst and EastGroup Properties

The main advantage of trading using opposite Ecovyst and EastGroup Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecovyst 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 Ecovyst 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.