Correlation Between Agree Realty and Kite Realty

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

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

Diversification Opportunities for Agree Realty and Kite Realty

0.79

Correlation Coefficient

Agree Realty  Kite Realty

Poor diversification

The 3 months correlation between Agree and Kite is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Agree Realty 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 Agree Realty 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 Agree Realty 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 Agree Realty i.e., Agree Realty and Kite Realty go up and down completely randomly.

Pair Corralation between Agree Realty and Kite Realty

Considering the 90-day investment horizon Agree Realty is expected to generate 3.21 times less return on investment than Kite Realty. But when comparing it to its historical volatility, Agree Realty is 1.3 times less risky than Kite Realty. It trades about 0.01 of its potential returns per unit of risk. Kite Realty Group is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2,047  in Kite Realty Group on October 5, 2024 and sell it today you would earn a total of  426.00  from holding Kite Realty Group or generate 20.81% return on investment over 90 days.

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

Agree Realty  vs.  Kite Realty Group

Agree Realty

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Agree Realty has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Agree Realty is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Kite Realty Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kite Realty Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Kite Realty is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Agree Realty and Kite Realty

The main advantage of trading using opposite Agree Realty and Kite Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agree Realty 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 Agree Realty 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.