Correlation Between Papa Johns and EastGroup Properties

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

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

Diversification Opportunities for Papa Johns and EastGroup Properties

-0.32

Correlation Coefficient

Papa Johns  EastGroup Properties

Very good diversification

The 3 months correlation between Papa and EastGroup is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Papa Johns International and EastGroup Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EastGroup Properties and Papa Johns 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 Papa Johns International 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 Papa Johns i.e., Papa Johns and EastGroup Properties go up and down completely randomly.

Pair Corralation between Papa Johns and EastGroup Properties

Assuming the 90 days horizon Papa Johns International is expected to under-perform the EastGroup Properties. In addition to that, Papa Johns is 1.62 times more volatile than EastGroup Properties. It trades about -0.03 of its total potential returns per unit of risk. EastGroup Properties is currently generating about 0.03 per unit of volatility. If you would invest  13,296  in EastGroup Properties on September 5, 2024 and sell it today you would earn a total of  2,804  from holding EastGroup Properties or generate 21.09% return on investment over 90 days.

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

Papa Johns International  vs.  EastGroup Properties

Papa Johns International

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Papa Johns International are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Papa Johns may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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. Despite nearly stable basic indicators, EastGroup Properties is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Papa Johns and EastGroup Properties

The main advantage of trading using opposite Papa Johns and EastGroup Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Papa Johns 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 Papa Johns International 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.

Check out your portfolio center.

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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.