Correlation Between ALLSTATE and EastGroup Properties

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

By analyzing existing cross correlation between ALLSTATE P 555 and EastGroup Properties, you can compare the effects of market volatilities on ALLSTATE 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 ALLSTATE with a short position of EastGroup Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALLSTATE and EastGroup Properties.

Diversification Opportunities for ALLSTATE and EastGroup Properties

0.2

Correlation Coefficient

ALLSTATE  EastGroup Properties

Modest diversification

The 3 months correlation between ALLSTATE and EastGroup is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding ALLSTATE P 555 and EastGroup Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EastGroup Properties and ALLSTATE 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 ALLSTATE P 555 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 ALLSTATE i.e., ALLSTATE and EastGroup Properties go up and down completely randomly.

Pair Corralation between ALLSTATE and EastGroup Properties

Assuming the 90 days trading horizon ALLSTATE P 555 is expected to generate 0.93 times more return on investment than EastGroup Properties. However, ALLSTATE P 555 is 1.07 times less risky than EastGroup Properties. It trades about 0.06 of its potential returns per unit of risk. EastGroup Properties is currently generating about -0.06 per unit of risk. If you would invest  10,327  in ALLSTATE P 555 on October 24, 2024 and sell it today you would earn a total of  396.00  from holding ALLSTATE P 555 or generate 3.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	88.33%
Values	Daily Returns

ALLSTATE P 555  vs.  EastGroup Properties

ALLSTATE P 555

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ALLSTATE P 555 are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, ALLSTATE is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

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. Even with relatively invariable technical and fundamental indicators, EastGroup Properties is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with ALLSTATE and EastGroup Properties

The main advantage of trading using opposite ALLSTATE and EastGroup Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALLSTATE 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 ALLSTATE P 555 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.