Correlation Between Plymouth Industrial and EastGroup Properties

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

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

Diversification Opportunities for Plymouth Industrial and EastGroup Properties

-0.39

Correlation Coefficient

Plymouth Industrial  EastGroup Properties

Very good diversification

The 3 months correlation between Plymouth and EastGroup is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Plymouth Industrial REIT and EastGroup Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EastGroup Properties and Plymouth Industrial 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 Plymouth Industrial REIT 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 Plymouth Industrial i.e., Plymouth Industrial and EastGroup Properties go up and down completely randomly.

Pair Corralation between Plymouth Industrial and EastGroup Properties

Given the investment horizon of 90 days Plymouth Industrial REIT is expected to under-perform the EastGroup Properties. In addition to that, Plymouth Industrial is 1.15 times more volatile than EastGroup Properties. It trades about -0.04 of its total potential returns per unit of risk. EastGroup Properties is currently generating about 0.13 per unit of volatility. If you would invest  15,973  in EastGroup Properties on December 30, 2024 and sell it today you would earn a total of  1,671  from holding EastGroup Properties or generate 10.46% return on investment over 90 days.

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

Plymouth Industrial REIT  vs.  EastGroup Properties

Plymouth Industrial REIT

Risk-Adjusted Performance

Very Weak

Over the last 90 days Plymouth Industrial REIT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Plymouth Industrial is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

EastGroup Properties

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in EastGroup Properties are ranked lower than 9 (%) 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.

Pair Trading with Plymouth Industrial and EastGroup Properties

The main advantage of trading using opposite Plymouth Industrial and EastGroup Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Plymouth Industrial 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 Plymouth Industrial REIT 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.