Correlation Between Four Corners and Kite Realty

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

By analyzing existing cross correlation between Four Corners Property and Kite Realty Group, you can compare the effects of market volatilities on Four Corners and Kite Realty 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 Four Corners with a short position of Kite Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Four Corners and Kite Realty.

Diversification Opportunities for Four Corners and Kite Realty

0.54

Correlation Coefficient

Four Corners  Kite Realty

Very weak diversification

The 3 months correlation between Four and Kite is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Four Corners Property and Kite Realty Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kite Realty Group and Four Corners 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 Four Corners Property are associated (or correlated) with Kite Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kite Realty Group has no effect on the direction of Four Corners i.e., Four Corners and Kite Realty go up and down completely randomly.

Pair Corralation between Four Corners and Kite Realty

Given the investment horizon of 90 days Four Corners is expected to generate 2.82 times less return on investment than Kite Realty. But when comparing it to its historical volatility, Four Corners Property is 1.14 times less risky than Kite Realty. It trades about 0.08 of its potential returns per unit of risk. Kite Realty Group is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  2,098  in Kite Realty Group on March 28, 2024 and sell it today you would earn a total of  89.00  from holding Kite Realty Group or generate 4.24% return on investment over 90 days.

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

Four Corners Property  vs.  Kite Realty Group

Four Corners Property

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Four Corners Property has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Four Corners is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Kite Realty Group

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kite Realty Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Kite Realty is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Four Corners and Kite Realty

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

The idea behind Four Corners Property and Kite Realty Group 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.

Check out your portfolio center.

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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.