Correlation Between EastGroup Properties and Universal

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

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

Diversification Opportunities for EastGroup Properties and Universal

0.4

Correlation Coefficient

EastGroup Properties  Universal

Very weak diversification

The 3 months correlation between EastGroup and Universal is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding EastGroup Properties and Universal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal 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 Universal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal has no effect on the direction of EastGroup Properties i.e., EastGroup Properties and Universal go up and down completely randomly.

Pair Corralation between EastGroup Properties and Universal

Considering the 90-day investment horizon EastGroup Properties is expected to generate 0.97 times more return on investment than Universal. However, EastGroup Properties is 1.03 times less risky than Universal. It trades about 0.11 of its potential returns per unit of risk. Universal is currently generating about 0.04 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  1,343  from holding EastGroup Properties or generate 8.41% return on investment over 90 days.

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

EastGroup Properties  vs.  Universal

EastGroup Properties

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in EastGroup Properties are ranked lower than 8 (%) 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.

Universal

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Universal are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Universal is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with EastGroup Properties and Universal

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

The idea behind EastGroup Properties and Universal 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.