Correlation Between EastGroup Properties and Public Storage

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

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

Diversification Opportunities for EastGroup Properties and Public Storage

0.29

Correlation Coefficient

EastGroup Properties  Public Storage

Modest diversification

The 3 months correlation between EastGroup and Public is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding EastGroup Properties and Public Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Public Storage and EastGroup Properties 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 EastGroup Properties are associated (or correlated) with Public Storage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Public Storage has no effect on the direction of EastGroup Properties i.e., EastGroup Properties and Public Storage go up and down completely randomly.

Pair Corralation between EastGroup Properties and Public Storage

Assuming the 90 days horizon EastGroup Properties is expected to generate 0.76 times more return on investment than Public Storage. However, EastGroup Properties is 1.31 times less risky than Public Storage. It trades about 0.09 of its potential returns per unit of risk. Public Storage is currently generating about -0.03 per unit of risk. If you would invest  15,161  in EastGroup Properties on December 30, 2024 and sell it today you would earn a total of  1,039  from holding EastGroup Properties or generate 6.85% return on investment over 90 days.

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

EastGroup Properties  vs.  Public Storage

EastGroup Properties

Risk-Adjusted Performance

OK

Over the last 90 days EastGroup Properties has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly weak basic indicators, EastGroup Properties may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Public Storage

Risk-Adjusted Performance

Very Weak

Over the last 90 days Public Storage has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Public Storage is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with EastGroup Properties and Public Storage

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

The idea behind EastGroup Properties and Public Storage 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 Anywhere module to track or share privately all of your investments from the convenience of any device.