Correlation Between EastGroup Properties and Empire State

Can any of the company-specific risk be diversified away by investing in both EastGroup Properties and Empire State 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 Empire State into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between EastGroup Properties and Empire State Realty, you can compare the effects of market volatilities on EastGroup Properties and Empire State 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 Empire State. Check out your portfolio center. Please also check ongoing floating volatility patterns of EastGroup Properties and Empire State.

Diversification Opportunities for EastGroup Properties and Empire State

0.59

Correlation Coefficient

EastGroup Properties  Empire State

Very weak diversification

The 3 months correlation between EastGroup and Empire is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding EastGroup Properties and Empire State Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Empire State Realty 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 Empire State. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Empire State Realty has no effect on the direction of EastGroup Properties i.e., EastGroup Properties and Empire State go up and down completely randomly.

Pair Corralation between EastGroup Properties and Empire State

Considering the 90-day investment horizon EastGroup Properties is expected to generate 4.55 times less return on investment than Empire State. But when comparing it to its historical volatility, EastGroup Properties is 2.18 times less risky than Empire State. It trades about 0.01 of its potential returns per unit of risk. Empire State Realty is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  701.00  in Empire State Realty on May 7, 2025 and sell it today you would earn a total of  9.00  from holding Empire State Realty or generate 1.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

EastGroup Properties  vs.  Empire State Realty

EastGroup Properties

Risk-Adjusted Performance

Weakest

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 latest stock price agitation, may contribute to short-term losses for the retail investors.

Empire State Realty

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Empire State Realty are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, Empire State is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with EastGroup Properties and Empire State

The main advantage of trading using opposite EastGroup Properties and Empire State positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EastGroup Properties position performs unexpectedly, Empire State 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 Empire State will offset losses from the drop in Empire State's long position.

The idea behind EastGroup Properties and Empire State Realty 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.