Correlation Between EastGroup Properties and Allegion PLC
Can any of the company-specific risk be diversified away by investing in both EastGroup Properties and Allegion PLC 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 EastGroup Properties and Allegion PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EastGroup Properties and Allegion PLC, you can compare the effects of market volatilities on EastGroup Properties and Allegion PLC 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 EastGroup Properties with a short position of Allegion PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of EastGroup Properties and Allegion PLC.
Diversification Opportunities for EastGroup Properties and Allegion PLC
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between EastGroup and Allegion is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding EastGroup Properties and Allegion PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allegion PLC and EastGroup Properties 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 EastGroup Properties are associated (or correlated) with Allegion PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allegion PLC has no effect on the direction of EastGroup Properties i.e., EastGroup Properties and Allegion PLC go up and down completely randomly.
Pair Corralation between EastGroup Properties and Allegion PLC
Considering the 90-day investment horizon EastGroup Properties is expected to generate 1.22 times less return on investment than Allegion PLC. But when comparing it to its historical volatility, EastGroup Properties is 1.09 times less risky than Allegion PLC. It trades about 0.02 of its potential returns per unit of risk. Allegion PLC is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 11,193 in Allegion PLC on November 9, 2024 and sell it today you would earn a total of 1,737 from holding Allegion PLC or generate 15.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EastGroup Properties vs. Allegion PLC
Performance |
| Timeline |
| EastGroup Properties |
| Allegion PLC |
EastGroup Properties and Allegion PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EastGroup Properties and Allegion PLC
The main advantage of trading using opposite EastGroup Properties and Allegion PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EastGroup Properties position performs unexpectedly, Allegion PLC 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 Allegion PLC will offset losses from the drop in Allegion PLC's long position.| EastGroup Properties vs. Terreno Realty | EastGroup Properties vs. Plymouth Industrial REIT | EastGroup Properties vs. LXP Industrial Trust | EastGroup Properties vs. First Industrial Realty |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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