Correlation Between EastGroup Properties and Micron Technology

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

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

Diversification Opportunities for EastGroup Properties and Micron Technology

0.75

Correlation Coefficient

EastGroup Properties  Micron Technology

Poor diversification

The 3 months correlation between EastGroup and Micron is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding EastGroup Properties and Micron Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micron Technology 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 Micron Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Micron Technology has no effect on the direction of EastGroup Properties i.e., EastGroup Properties and Micron Technology go up and down completely randomly.

Pair Corralation between EastGroup Properties and Micron Technology

Considering the 90-day investment horizon EastGroup Properties is expected to generate 11.41 times less return on investment than Micron Technology. But when comparing it to its historical volatility, EastGroup Properties is 2.16 times less risky than Micron Technology. It trades about 0.01 of its potential returns per unit of risk. Micron Technology is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  5,781  in Micron Technology on October 11, 2024 and sell it today you would earn a total of  4,160  from holding Micron Technology or generate 71.96% return on investment over 90 days.

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

EastGroup Properties  vs.  Micron Technology

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 latest unfluctuating performance, the Stock's technical and fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Micron Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Micron Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Micron Technology is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with EastGroup Properties and Micron Technology

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

The idea behind EastGroup Properties and Micron Technology 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.