Correlation Between Allied Properties and Kilroy Realty

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

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

Diversification Opportunities for Allied Properties and Kilroy Realty

-0.05

Correlation Coefficient

Allied Properties  Kilroy Realty

Good diversification

The 3 months correlation between Allied and Kilroy is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Allied Properties Real and Kilroy Realty Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kilroy Realty Corp and Allied Properties 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 Allied Properties Real are associated (or correlated) with Kilroy Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kilroy Realty Corp has no effect on the direction of Allied Properties i.e., Allied Properties and Kilroy Realty go up and down completely randomly.

Pair Corralation between Allied Properties and Kilroy Realty

Assuming the 90 days horizon Allied Properties Real is expected to generate 0.51 times more return on investment than Kilroy Realty. However, Allied Properties Real is 1.95 times less risky than Kilroy Realty. It trades about -0.16 of its potential returns per unit of risk. Kilroy Realty Corp is currently generating about -0.09 per unit of risk. If you would invest  1,324  in Allied Properties Real on October 11, 2024 and sell it today you would lose (99.00) from holding Allied Properties Real or give up 7.48% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.56%
Values	Daily Returns

Allied Properties Real  vs.  Kilroy Realty Corp

Allied Properties Real

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Allied Properties Real has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Kilroy Realty Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Allied Properties and Kilroy Realty

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

The idea behind Allied Properties Real and Kilroy Realty Corp 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.