Correlation Between Acadia Realty and EastGroup Properties

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

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

Diversification Opportunities for Acadia Realty and EastGroup Properties

-0.56

Correlation Coefficient

Acadia Realty  EastGroup Properties

Excellent diversification

The 3 months correlation between Acadia and EastGroup is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Acadia Realty Trust and EastGroup Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EastGroup Properties and Acadia Realty 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 Acadia Realty Trust 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 Acadia Realty i.e., Acadia Realty and EastGroup Properties go up and down completely randomly.

Pair Corralation between Acadia Realty and EastGroup Properties

Considering the 90-day investment horizon Acadia Realty Trust is expected to generate 0.96 times more return on investment than EastGroup Properties. However, Acadia Realty Trust is 1.05 times less risky than EastGroup Properties. It trades about 0.06 of its potential returns per unit of risk. EastGroup Properties is currently generating about -0.18 per unit of risk. If you would invest  2,298  in Acadia Realty Trust on September 25, 2024 and sell it today you would earn a total of  88.00  from holding Acadia Realty Trust or generate 3.83% return on investment over 90 days.

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

Acadia Realty Trust  vs.  EastGroup Properties

Acadia Realty Trust

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Acadia Realty Trust are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable forward-looking signals, Acadia Realty is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

EastGroup Properties

Risk-Adjusted Performance

0 of 100

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 unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Acadia Realty and EastGroup Properties

The main advantage of trading using opposite Acadia Realty and EastGroup Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acadia Realty 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.

The idea behind Acadia Realty Trust and EastGroup Properties 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.