Correlation Between Saul Centers and Kite Realty

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

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

Diversification Opportunities for Saul Centers and Kite Realty

0.96

Correlation Coefficient

Saul Centers  Kite Realty

Almost no diversification

The 3 months correlation between Saul and Kite is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Saul Centers 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 Saul Centers 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 Saul Centers 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 Saul Centers i.e., Saul Centers and Kite Realty go up and down completely randomly.

Pair Corralation between Saul Centers and Kite Realty

Considering the 90-day investment horizon Saul Centers is expected to generate 0.67 times more return on investment than Kite Realty. However, Saul Centers is 1.5 times less risky than Kite Realty. It trades about -0.03 of its potential returns per unit of risk. Kite Realty Group is currently generating about -0.24 per unit of risk. If you would invest  3,704  in Saul Centers on November 28, 2024 and sell it today you would lose (28.00) from holding Saul Centers or give up 0.76% of portfolio value over 90 days.

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

Saul Centers  vs.  Kite Realty Group

Saul Centers

Risk-Adjusted Performance

Very Weak

Over the last 90 days Saul Centers has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private 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 unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Saul Centers and Kite Realty

The main advantage of trading using opposite Saul Centers and Kite Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Saul Centers 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 Saul Centers 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.