Correlation Between Big Yellow and EastGroup Properties
Can any of the company-specific risk be diversified away by investing in both Big Yellow 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 Big Yellow and EastGroup Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Big Yellow Group and EastGroup Properties, you can compare the effects of market volatilities on Big Yellow 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 Big Yellow with a short position of EastGroup Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Big Yellow and EastGroup Properties.
Diversification Opportunities for Big Yellow and EastGroup Properties
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Big and EastGroup is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Big Yellow Group and EastGroup Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EastGroup Properties and Big Yellow 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 Big Yellow Group 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 Big Yellow i.e., Big Yellow and EastGroup Properties go up and down completely randomly.
Pair Corralation between Big Yellow and EastGroup Properties
Assuming the 90 days horizon Big Yellow Group is expected to under-perform the EastGroup Properties. In addition to that, Big Yellow is 2.34 times more volatile than EastGroup Properties. It trades about -0.24 of its total potential returns per unit of risk. EastGroup Properties is currently generating about 0.03 per unit of volatility. If you would invest 17,128 in EastGroup Properties on September 1, 2024 and sell it today you would earn a total of 93.00 from holding EastGroup Properties or generate 0.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Big Yellow Group vs. EastGroup Properties
Performance |
| Timeline |
| Big Yellow Group |
| EastGroup Properties |
Big Yellow and EastGroup Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Big Yellow and EastGroup Properties
The main advantage of trading using opposite Big Yellow and EastGroup Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Big Yellow 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.| Big Yellow vs. LXP Industrial Trust | Big Yellow vs. First Industrial Realty | Big Yellow vs. Plymouth Industrial REIT | Big Yellow vs. Terreno Realty |
| 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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