Correlation Between Simon Property and Eastern

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

By analyzing existing cross correlation between Simon Property Group and Eastern Co, you can compare the effects of market volatilities on Simon Property and Eastern 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 Simon Property with a short position of Eastern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simon Property and Eastern.

Diversification Opportunities for Simon Property and Eastern

0.45

Correlation Coefficient

Simon Property  Eastern

Very weak diversification

The 3 months correlation between Simon and Eastern is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Simon Property Group and Eastern Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern and Simon Property 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 Simon Property Group are associated (or correlated) with Eastern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastern has no effect on the direction of Simon Property i.e., Simon Property and Eastern go up and down completely randomly.

Pair Corralation between Simon Property and Eastern

Considering the 90-day investment horizon Simon Property Group is expected to under-perform the Eastern. But the stock apears to be less risky and, when comparing its historical volatility, Simon Property Group is 1.52 times less risky than Eastern. The stock trades about -0.01 of its potential returns per unit of risk. The Eastern Co is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2,625  in Eastern Co on December 28, 2024 and sell it today you would earn a total of  48.00  from holding Eastern Co or generate 1.83% return on investment over 90 days.

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

Simon Property Group  vs.  Eastern Co

Simon Property Group

Risk-Adjusted Performance

Very Weak

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

Eastern

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Eastern Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent primary indicators, Eastern is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Simon Property and Eastern

The main advantage of trading using opposite Simon Property and Eastern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simon Property position performs unexpectedly, Eastern 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 Eastern will offset losses from the drop in Eastern's long position.

The idea behind Simon Property Group and Eastern Co 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..