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

0.49

Correlation Coefficient

Public Storage  EastGroup Properties

Very weak diversification

The 3 months correlation between Public and EastGroup is 0.49. 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

Assuming the 90 days horizon Public Storage is expected to generate 1.04 times more return on investment than EastGroup Properties. However, Public Storage is 1.04 times more volatile than EastGroup Properties. It trades about -0.02 of its potential returns per unit of risk. EastGroup Properties is currently generating about -0.03 per unit of risk. If you would invest  32,210  in Public Storage on September 13, 2024 and sell it today you would lose (670.00) from holding Public Storage or give up 2.08% of portfolio value over 90 days.

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

Public Storage  vs.  EastGroup Properties

Public Storage

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Public Storage has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Public Storage is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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 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.