Correlation Between EastGroup Properties and Office Properties

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

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

Diversification Opportunities for EastGroup Properties and Office Properties

-0.37

Correlation Coefficient

EastGroup Properties  Office Properties

Very good diversification

The 3 months correlation between EastGroup and Office is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding EastGroup Properties and Office Properties Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Office Properties Income 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 Office Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Office Properties Income has no effect on the direction of EastGroup Properties i.e., EastGroup Properties and Office Properties go up and down completely randomly.

Pair Corralation between EastGroup Properties and Office Properties

Considering the 90-day investment horizon EastGroup Properties is expected to generate 0.29 times more return on investment than Office Properties. However, EastGroup Properties is 3.46 times less risky than Office Properties. It trades about 0.13 of its potential returns per unit of risk. Office Properties Income is currently generating about -0.23 per unit of risk. If you would invest  15,973  in EastGroup Properties on December 29, 2024 and sell it today you would earn a total of  1,708  from holding EastGroup Properties or generate 10.69% return on investment over 90 days.

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

EastGroup Properties  vs.  Office Properties Income

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.

Office Properties Income

Risk-Adjusted Performance

Very Weak

Over the last 90 days Office Properties Income has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with EastGroup Properties and Office Properties

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

The idea behind EastGroup Properties and Office Properties Income 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.