Correlation Between Americold Realty and EastGroup Properties

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Can any of the company-specific risk be diversified away by investing in both Americold Realty 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 Americold Realty and EastGroup Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Americold Realty Trust and EastGroup Properties, you can compare the effects of market volatilities on Americold Realty 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 Americold Realty with a short position of EastGroup Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Americold Realty and EastGroup Properties.

Diversification Opportunities for Americold Realty and EastGroup Properties

0.84
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Americold and EastGroup is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Americold Realty Trust and EastGroup Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EastGroup Properties and Americold Realty 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 Americold Realty Trust 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 Americold Realty i.e., Americold Realty and EastGroup Properties go up and down completely randomly.

Pair Corralation between Americold Realty and EastGroup Properties

Given the investment horizon of 90 days Americold Realty Trust is expected to under-perform the EastGroup Properties. In addition to that, Americold Realty is 2.29 times more volatile than EastGroup Properties. It trades about -0.15 of its total potential returns per unit of risk. EastGroup Properties is currently generating about -0.07 per unit of volatility. If you would invest  17,648  in EastGroup Properties on August 27, 2024 and sell it today you would lose (311.00) from holding EastGroup Properties or give up 1.76% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Americold Realty Trust  vs.  EastGroup Properties

 Performance 
       Timeline  
Americold Realty Trust 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Americold Realty Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's essential indicators remain rather sound which may send shares a bit higher in December 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.
EastGroup Properties 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.

Americold Realty and EastGroup Properties Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Americold Realty and EastGroup Properties

The main advantage of trading using opposite Americold Realty and EastGroup Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Americold Realty 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 Americold Realty Trust 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.

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