Correlation Between BRC and EastGroup Properties
Can any of the company-specific risk be diversified away by investing in both BRC 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 BRC and EastGroup Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BRC Inc and EastGroup Properties, you can compare the effects of market volatilities on BRC 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 BRC with a short position of EastGroup Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of BRC and EastGroup Properties.
Diversification Opportunities for BRC and EastGroup Properties
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BRC and EastGroup is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding BRC Inc and EastGroup Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EastGroup Properties and BRC 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 BRC Inc 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 BRC i.e., BRC and EastGroup Properties go up and down completely randomly.
Pair Corralation between BRC and EastGroup Properties
Given the investment horizon of 90 days BRC Inc is expected to generate 1.97 times more return on investment than EastGroup Properties. However, BRC is 1.97 times more volatile than EastGroup Properties. It trades about -0.06 of its potential returns per unit of risk. EastGroup Properties is currently generating about -0.14 per unit of risk. If you would invest 339.00 in BRC Inc on October 24, 2024 and sell it today you would lose (48.00) from holding BRC Inc or give up 14.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BRC Inc vs. EastGroup Properties
Performance |
| Timeline |
| BRC Inc |
| EastGroup Properties |
BRC and EastGroup Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BRC and EastGroup Properties
The main advantage of trading using opposite BRC and EastGroup Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BRC 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 BRC Inc 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.| EastGroup Properties vs. Terreno Realty | EastGroup Properties vs. Plymouth Industrial REIT | EastGroup Properties vs. LXP Industrial Trust | EastGroup Properties vs. First Industrial Realty |
Check out your portfolio center.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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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