Correlation Between Realty Income and EastGroup Properties
Can any of the company-specific risk be diversified away by investing in both Realty Income 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 Realty Income and EastGroup Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Realty Income and EastGroup Properties, you can compare the effects of market volatilities on Realty Income 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 Realty Income with a short position of EastGroup Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Realty Income and EastGroup Properties.
Diversification Opportunities for Realty Income and EastGroup Properties
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Realty and EastGroup is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Realty Income and EastGroup Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EastGroup Properties and Realty Income 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 Realty Income 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 Realty Income i.e., Realty Income and EastGroup Properties go up and down completely randomly.
Pair Corralation between Realty Income and EastGroup Properties
Taking into account the 90-day investment horizon Realty Income is expected to generate 4.25 times less return on investment than EastGroup Properties. But when comparing it to its historical volatility, Realty Income is 1.17 times less risky than EastGroup Properties. It trades about 0.01 of its potential returns per unit of risk. EastGroup Properties is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 14,834 in EastGroup Properties on August 23, 2024 and sell it today you would earn a total of 2,363 from holding EastGroup Properties or generate 15.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Realty Income vs. EastGroup Properties
Performance |
| Timeline |
| Realty Income |
| EastGroup Properties |
Realty Income and EastGroup Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Realty Income and EastGroup Properties
The main advantage of trading using opposite Realty Income and EastGroup Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Realty Income 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.| Realty Income vs. Federal Realty Investment | Realty Income vs. Macerich Company | Realty Income vs. National Retail Properties | Realty Income vs. Kimco 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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