Correlation Between EastGroup Properties and CECO Environmental

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

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

Diversification Opportunities for EastGroup Properties and CECO Environmental

-0.91

Correlation Coefficient

EastGroup Properties  CECO Environmental

Pay attention - limited upside

The 3 months correlation between EastGroup and CECO is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding EastGroup Properties and CECO Environmental Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CECO Environmental Corp 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 CECO Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CECO Environmental Corp has no effect on the direction of EastGroup Properties i.e., EastGroup Properties and CECO Environmental go up and down completely randomly.

Pair Corralation between EastGroup Properties and CECO Environmental

Considering the 90-day investment horizon EastGroup Properties is expected to generate 0.49 times more return on investment than CECO Environmental. However, EastGroup Properties is 2.06 times less risky than CECO Environmental. It trades about 0.14 of its potential returns per unit of risk. CECO Environmental Corp is currently generating about -0.1 per unit of risk. If you would invest  15,968  in EastGroup Properties on December 21, 2024 and sell it today you would earn a total of  1,719  from holding EastGroup Properties or generate 10.77% return on investment over 90 days.

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

EastGroup Properties  vs.  CECO Environmental Corp

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.

CECO Environmental Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days CECO Environmental Corp 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 fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with EastGroup Properties and CECO Environmental

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

The idea behind EastGroup Properties and CECO Environmental Corp 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.