Correlation Between Brandywine Realty and Kilroy Realty

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

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

Diversification Opportunities for Brandywine Realty and Kilroy Realty

0.91

Correlation Coefficient

Brandywine Realty  Kilroy Realty

Almost no diversification

The 3 months correlation between Brandywine and Kilroy is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Brandywine Realty Trust 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 Brandywine 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 Brandywine Realty Trust 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 Brandywine Realty i.e., Brandywine Realty and Kilroy Realty go up and down completely randomly.

Pair Corralation between Brandywine Realty and Kilroy Realty

Considering the 90-day investment horizon Brandywine Realty Trust is expected to under-perform the Kilroy Realty. But the stock apears to be less risky and, when comparing its historical volatility, Brandywine Realty Trust is 1.07 times less risky than Kilroy Realty. The stock trades about -0.14 of its potential returns per unit of risk. The Kilroy Realty Corp is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest  3,996  in Kilroy Realty Corp on December 29, 2024 and sell it today you would lose (671.00) from holding Kilroy Realty Corp or give up 16.79% of portfolio value over 90 days.

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

Brandywine Realty Trust  vs.  Kilroy Realty Corp

Brandywine Realty Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Brandywine Realty Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Kilroy Realty Corp

Risk-Adjusted Performance

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 weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Brandywine Realty and Kilroy Realty

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

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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.