Correlation Between Broadstone Net and EastGroup Properties

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

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

Diversification Opportunities for Broadstone Net and EastGroup Properties

0.93

Correlation Coefficient

Broadstone Net  EastGroup Properties

Almost no diversification

The 3 months correlation between Broadstone and EastGroup is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Broadstone Net Lease and EastGroup Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EastGroup Properties and Broadstone Net 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 Broadstone Net Lease 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 Broadstone Net i.e., Broadstone Net and EastGroup Properties go up and down completely randomly.

Pair Corralation between Broadstone Net and EastGroup Properties

Considering the 90-day investment horizon Broadstone Net Lease is expected to generate 0.83 times more return on investment than EastGroup Properties. However, Broadstone Net Lease is 1.2 times less risky than EastGroup Properties. It trades about -0.2 of its potential returns per unit of risk. EastGroup Properties is currently generating about -0.18 per unit of risk. If you would invest  1,836  in Broadstone Net Lease on September 25, 2024 and sell it today you would lose (234.00) from holding Broadstone Net Lease or give up 12.75% of portfolio value over 90 days.

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

Broadstone Net Lease  vs.  EastGroup Properties

Broadstone Net Lease

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Broadstone Net Lease has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional 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 Broadstone Net and EastGroup Properties

The main advantage of trading using opposite Broadstone Net and EastGroup Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Broadstone Net 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 Broadstone Net Lease 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.