Correlation Between EastGroup Properties and American Healthcare

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

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

Diversification Opportunities for EastGroup Properties and American Healthcare

-0.67

Correlation Coefficient

EastGroup Properties  American Healthcare

Excellent diversification

The 3 months correlation between EastGroup and American is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding EastGroup Properties and American Healthcare REIT, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Healthcare REIT, 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 American Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Healthcare REIT, has no effect on the direction of EastGroup Properties i.e., EastGroup Properties and American Healthcare go up and down completely randomly.

Pair Corralation between EastGroup Properties and American Healthcare

Considering the 90-day investment horizon EastGroup Properties is expected to under-perform the American Healthcare. But the stock apears to be less risky and, when comparing its historical volatility, EastGroup Properties is 1.37 times less risky than American Healthcare. The stock trades about -0.15 of its potential returns per unit of risk. The American Healthcare REIT, is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  2,516  in American Healthcare REIT, on September 19, 2024 and sell it today you would earn a total of  319.00  from holding American Healthcare REIT, or generate 12.68% return on investment over 90 days.

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

EastGroup Properties  vs.  American Healthcare REIT,

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 latest unfluctuating performance, the Stock's technical and fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

American Healthcare REIT,

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in American Healthcare REIT, are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating technical indicators, American Healthcare reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EastGroup Properties and American Healthcare

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

The idea behind EastGroup Properties and American Healthcare REIT, 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.