Correlation Between LXP Industrial and Kite Realty

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

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

Diversification Opportunities for LXP Industrial and Kite Realty

0.16

Correlation Coefficient

LXP Industrial  Kite Realty

Average diversification

The 3 months correlation between LXP and Kite is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding LXP Industrial Trust 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 LXP Industrial 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 LXP Industrial Trust 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 LXP Industrial i.e., LXP Industrial and Kite Realty go up and down completely randomly.

Pair Corralation between LXP Industrial and Kite Realty

Considering the 90-day investment horizon LXP Industrial is expected to generate 18.95 times less return on investment than Kite Realty. In addition to that, LXP Industrial is 1.23 times more volatile than Kite Realty Group. It trades about 0.01 of its total potential returns per unit of risk. Kite Realty Group is currently generating about 0.2 per unit of volatility. If you would invest  2,432  in Kite Realty Group on August 14, 2024 and sell it today you would earn a total of  313.00  from holding Kite Realty Group or generate 12.87% return on investment over 90 days.

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

LXP Industrial Trust  vs.  Kite Realty Group

LXP Industrial Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LXP Industrial Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, LXP Industrial is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Kite Realty Group

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kite Realty Group are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Kite Realty may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with LXP Industrial and Kite Realty

The main advantage of trading using opposite LXP Industrial and Kite Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LXP Industrial 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 LXP Industrial Trust 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.

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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.