Correlation Between Global Self and EastGroup Properties

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

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

Diversification Opportunities for Global Self and EastGroup Properties

-0.01

Correlation Coefficient

Global Self  EastGroup Properties

Good diversification

The 3 months correlation between Global and EastGroup is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Global Self Storage and EastGroup Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EastGroup Properties and Global Self 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 Global Self 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 Global Self i.e., Global Self and EastGroup Properties go up and down completely randomly.

Pair Corralation between Global Self and EastGroup Properties

Given the investment horizon of 90 days Global Self Storage is expected to under-perform the EastGroup Properties. But the stock apears to be less risky and, when comparing its historical volatility, Global Self Storage is 1.32 times less risky than EastGroup Properties. The stock trades about -0.05 of its potential returns per unit of risk. The EastGroup Properties is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  15,973  in EastGroup Properties on December 29, 2024 and sell it today you would earn a total of  1,708  from holding EastGroup Properties or generate 10.69% return on investment over 90 days.

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

Global Self Storage  vs.  EastGroup Properties

Global Self Storage

Risk-Adjusted Performance

Very Weak

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

EastGroup Properties

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in EastGroup Properties are ranked lower than 10 (%) 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 Global Self and EastGroup Properties

The main advantage of trading using opposite Global Self and EastGroup Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Self 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 Global Self 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.