Correlation Between Yara International and EastGroup Properties

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

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

Diversification Opportunities for Yara International and EastGroup Properties

0.48

Correlation Coefficient

Yara International  EastGroup Properties

Very weak diversification

The 3 months correlation between Yara and EastGroup is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Yara International ASA and EastGroup Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EastGroup Properties and Yara International 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 Yara International ASA 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 Yara International i.e., Yara International and EastGroup Properties go up and down completely randomly.

Pair Corralation between Yara International and EastGroup Properties

Assuming the 90 days horizon Yara International ASA is expected to under-perform the EastGroup Properties. In addition to that, Yara International is 1.22 times more volatile than EastGroup Properties. It trades about -0.14 of its total potential returns per unit of risk. EastGroup Properties is currently generating about 0.0 per unit of volatility. If you would invest  16,561  in EastGroup Properties on September 12, 2024 and sell it today you would lose (161.00) from holding EastGroup Properties or give up 0.97% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Yara International ASA  vs.  EastGroup Properties

Yara International ASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yara International ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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. Despite nearly stable basic indicators, EastGroup Properties is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Yara International and EastGroup Properties

The main advantage of trading using opposite Yara International and EastGroup Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yara International 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 Yara International ASA 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.