Correlation Between Alaska Air and Kite Realty

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

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

Diversification Opportunities for Alaska Air and Kite Realty

0.23

Correlation Coefficient

Alaska Air  Kite Realty

Modest diversification

The 3 months correlation between Alaska and Kite is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Alaska Air Group 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 Alaska Air 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 Alaska Air Group 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 Alaska Air i.e., Alaska Air and Kite Realty go up and down completely randomly.

Pair Corralation between Alaska Air and Kite Realty

Considering the 90-day investment horizon Alaska Air Group is expected to under-perform the Kite Realty. In addition to that, Alaska Air is 1.61 times more volatile than Kite Realty Group. It trades about -0.11 of its total potential returns per unit of risk. Kite Realty Group is currently generating about -0.09 per unit of volatility. If you would invest  2,475  in Kite Realty Group on December 27, 2024 and sell it today you would lose (223.00) from holding Kite Realty Group or give up 9.01% of portfolio value over 90 days.

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

Alaska Air Group  vs.  Kite Realty Group

Alaska Air Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alaska Air Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Kite Realty Group

Risk-Adjusted Performance

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 latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Alaska Air and Kite Realty

The main advantage of trading using opposite Alaska Air and Kite Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alaska Air 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 Alaska Air Group 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.