Correlation Between Eastern and Postal Realty
Can any of the company-specific risk be diversified away by investing in both Eastern and Postal Realty 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 Eastern and Postal Realty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastern Co and Postal Realty Trust, you can compare the effects of market volatilities on Eastern and Postal Realty 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 Eastern with a short position of Postal Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastern and Postal Realty.
Diversification Opportunities for Eastern and Postal Realty
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Eastern and Postal is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Co and Postal Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Postal Realty Trust and Eastern 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 Eastern Co are associated (or correlated) with Postal Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Postal Realty Trust has no effect on the direction of Eastern i.e., Eastern and Postal Realty go up and down completely randomly.
Pair Corralation between Eastern and Postal Realty
Considering the 90-day investment horizon Eastern Co is expected to under-perform the Postal Realty. In addition to that, Eastern is 2.1 times more volatile than Postal Realty Trust. It trades about -0.13 of its total potential returns per unit of risk. Postal Realty Trust is currently generating about -0.05 per unit of volatility. If you would invest 1,434 in Postal Realty Trust on August 28, 2024 and sell it today you would lose (40.00) from holding Postal Realty Trust or give up 2.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eastern Co vs. Postal Realty Trust
Performance |
| Timeline |
| Eastern |
| Postal Realty Trust |
Eastern and Postal Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastern and Postal Realty
The main advantage of trading using opposite Eastern and Postal Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastern position performs unexpectedly, Postal Realty 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 Postal Realty will offset losses from the drop in Postal Realty's long position.The idea behind Eastern Co and Postal Realty Trust 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.| Postal Realty vs. Office Properties Income | Postal Realty vs. Boston Properties | Postal Realty vs. SL Green Realty | Postal Realty vs. Alexandria Real Estate |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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