Correlation Between National Storage and EastGroup Properties

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

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

Diversification Opportunities for National Storage and EastGroup Properties

0.23

Correlation Coefficient

National Storage  EastGroup Properties

Modest diversification

The 3 months correlation between National and EastGroup is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding National Storage Affiliates and EastGroup Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EastGroup Properties and National Storage 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 National Storage Affiliates are associated (or correlated) with EastGroup Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EastGroup Properties has no effect on the direction of National Storage i.e., National Storage and EastGroup Properties go up and down completely randomly.

Pair Corralation between National Storage and EastGroup Properties

Considering the 90-day investment horizon National Storage Affiliates is expected to under-perform the EastGroup Properties. In addition to that, National Storage is 1.02 times more volatile than EastGroup Properties. It trades about -0.17 of its total potential returns per unit of risk. EastGroup Properties is currently generating about 0.05 per unit of volatility. If you would invest  17,260  in EastGroup Properties on November 19, 2024 and sell it today you would earn a total of  701.00  from holding EastGroup Properties or generate 4.06% return on investment over 90 days.

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

National Storage Affiliates  vs.  EastGroup Properties

National Storage Aff

Risk-Adjusted Performance

Very Weak

Over the last 90 days National Storage Affiliates 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 somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

EastGroup Properties

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in EastGroup Properties are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, EastGroup Properties is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with National Storage and EastGroup Properties

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

The idea behind National Storage Affiliates and EastGroup Properties 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.