Correlation Between Piedmont Office and Kennedy Wilson

Can any of the company-specific risk be diversified away by investing in both Piedmont Office and Kennedy Wilson 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 Piedmont Office and Kennedy Wilson into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Piedmont Office Realty and Kennedy Wilson Holdings, you can compare the effects of market volatilities on Piedmont Office and Kennedy Wilson 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 Piedmont Office with a short position of Kennedy Wilson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Piedmont Office and Kennedy Wilson.

Diversification Opportunities for Piedmont Office and Kennedy Wilson

0.59

Correlation Coefficient

Piedmont Office  Kennedy Wilson

Very weak diversification

The 3 months correlation between Piedmont and Kennedy is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Piedmont Office Realty and Kennedy Wilson Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kennedy Wilson Holdings and Piedmont Office 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 Piedmont Office Realty are associated (or correlated) with Kennedy Wilson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kennedy Wilson Holdings has no effect on the direction of Piedmont Office i.e., Piedmont Office and Kennedy Wilson go up and down completely randomly.

Pair Corralation between Piedmont Office and Kennedy Wilson

Considering the 90-day investment horizon Piedmont Office Realty is expected to generate 0.72 times more return on investment than Kennedy Wilson. However, Piedmont Office Realty is 1.38 times less risky than Kennedy Wilson. It trades about 0.09 of its potential returns per unit of risk. Kennedy Wilson Holdings is currently generating about 0.04 per unit of risk. If you would invest  643.00  in Piedmont Office Realty on February 20, 2024 and sell it today you would earn a total of  77.00  from holding Piedmont Office Realty or generate 11.98% return on investment over 90 days.

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

Piedmont Office Realty  vs.  Kennedy Wilson Holdings

Piedmont Office Realty

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Piedmont Office Realty are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady fundamental indicators, Piedmont Office may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Kennedy Wilson Holdings

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kennedy Wilson Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Kennedy Wilson may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Piedmont Office and Kennedy Wilson

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

The idea behind Piedmont Office Realty and Kennedy Wilson Holdings 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.