Correlation Between EastGroup Properties and Rexford Industrial

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Can any of the company-specific risk be diversified away by investing in both EastGroup Properties and Rexford Industrial 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 Rexford Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EastGroup Properties and Rexford Industrial Realty, you can compare the effects of market volatilities on EastGroup Properties and Rexford Industrial 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 Rexford Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of EastGroup Properties and Rexford Industrial.

Diversification Opportunities for EastGroup Properties and Rexford Industrial

0.75
  Correlation Coefficient

Poor diversification

The 3 months correlation between EastGroup and Rexford is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding EastGroup Properties and Rexford Industrial Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rexford Industrial 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 Rexford Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rexford Industrial Realty has no effect on the direction of EastGroup Properties i.e., EastGroup Properties and Rexford Industrial go up and down completely randomly.

Pair Corralation between EastGroup Properties and Rexford Industrial

Considering the 90-day investment horizon EastGroup Properties is expected to generate 0.84 times more return on investment than Rexford Industrial. However, EastGroup Properties is 1.19 times less risky than Rexford Industrial. It trades about -0.16 of its potential returns per unit of risk. Rexford Industrial Realty is currently generating about -0.16 per unit of risk. If you would invest  18,475  in EastGroup Properties on July 11, 2024 and sell it today you would lose (704.00) from holding EastGroup Properties or give up 3.81% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

EastGroup Properties  vs.  Rexford Industrial Realty

 Performance 
       Timeline  
EastGroup Properties 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
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 recent stock price agitation, may contribute to short-term losses for the retail investors.
Rexford Industrial Realty 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Rexford Industrial Realty has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Rexford Industrial is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

EastGroup Properties and Rexford Industrial Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with EastGroup Properties and Rexford Industrial

The main advantage of trading using opposite EastGroup Properties and Rexford Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EastGroup Properties position performs unexpectedly, Rexford Industrial 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 Rexford Industrial will offset losses from the drop in Rexford Industrial's long position.
The idea behind EastGroup Properties and Rexford Industrial 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.
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.

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