Correlation Between EastGroup Properties and Summit Materials
Can any of the company-specific risk be diversified away by investing in both EastGroup Properties and Summit Materials 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 Summit Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EastGroup Properties and Summit Materials, you can compare the effects of market volatilities on EastGroup Properties and Summit Materials 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 Summit Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of EastGroup Properties and Summit Materials.
Diversification Opportunities for EastGroup Properties and Summit Materials
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between EastGroup and Summit is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding EastGroup Properties and Summit Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Materials 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 Summit Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Materials has no effect on the direction of EastGroup Properties i.e., EastGroup Properties and Summit Materials go up and down completely randomly.
Pair Corralation between EastGroup Properties and Summit Materials
Considering the 90-day investment horizon EastGroup Properties is expected to generate 3.72 times more return on investment than Summit Materials. However, EastGroup Properties is 3.72 times more volatile than Summit Materials. It trades about 0.21 of its potential returns per unit of risk. Summit Materials is currently generating about 0.28 per unit of risk. If you would invest 15,822 in EastGroup Properties on November 3, 2024 and sell it today you would earn a total of 1,140 from holding EastGroup Properties or generate 7.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
EastGroup Properties vs. Summit Materials
Performance |
| Timeline |
| EastGroup Properties |
| Summit Materials |
EastGroup Properties and Summit Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EastGroup Properties and Summit Materials
The main advantage of trading using opposite EastGroup Properties and Summit Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EastGroup Properties position performs unexpectedly, Summit Materials 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 Summit Materials will offset losses from the drop in Summit Materials' 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 |
| Summit Materials vs. Martin Marietta Materials | Summit Materials vs. Vulcan Materials | Summit Materials vs. United States Lime | Summit Materials vs. James Hardie Industries |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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