Correlation Between Public Storage and EastGroup Properties

Can any of the company-specific risk be diversified away by investing in both Public 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 Public 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 Public Storage and EastGroup Properties, you can compare the effects of market volatilities on Public 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 Public Storage with a short position of EastGroup Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Public Storage and EastGroup Properties.

Diversification Opportunities for Public Storage and EastGroup Properties

0.2

Correlation Coefficient

Public Storage  EastGroup Properties

Modest diversification

The 3 months correlation between Public and EastGroup is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Public Storage and EastGroup Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EastGroup Properties and Public 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 Public Storage 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 Public Storage i.e., Public Storage and EastGroup Properties go up and down completely randomly.

Pair Corralation between Public Storage and EastGroup Properties

Considering the 90-day investment horizon Public Storage is expected to under-perform the EastGroup Properties. But the stock apears to be less risky and, when comparing its historical volatility, Public Storage is 1.06 times less risky than EastGroup Properties. The stock trades about -0.14 of its potential returns per unit of risk. The EastGroup Properties is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  16,921  in EastGroup Properties on December 1, 2024 and sell it today you would earn a total of  1,364  from holding EastGroup Properties or generate 8.06% return on investment over 90 days.

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

Public Storage  vs.  EastGroup Properties

Public Storage

Risk-Adjusted Performance

Very Weak

Over the last 90 days Public Storage has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company 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 7 (%) 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 Public Storage and EastGroup Properties

The main advantage of trading using opposite Public Storage and EastGroup Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Public 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 Public Storage 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.