Correlation Between Independence Realty and Kinsale Capital

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

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

Diversification Opportunities for Independence Realty and Kinsale Capital

0.76

Correlation Coefficient

Independence Realty  Kinsale Capital

Poor diversification

The 3 months correlation between Independence and Kinsale is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Independence Realty Trust and Kinsale Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinsale Capital Group and Independence 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 Independence Realty Trust are associated (or correlated) with Kinsale Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinsale Capital Group has no effect on the direction of Independence Realty i.e., Independence Realty and Kinsale Capital go up and down completely randomly.

Pair Corralation between Independence Realty and Kinsale Capital

Considering the 90-day investment horizon Independence Realty Trust is expected to generate 0.94 times more return on investment than Kinsale Capital. However, Independence Realty Trust is 1.06 times less risky than Kinsale Capital. It trades about -0.45 of its potential returns per unit of risk. Kinsale Capital Group is currently generating about -0.54 per unit of risk. If you would invest  2,117  in Independence Realty Trust on October 12, 2024 and sell it today you would lose (294.00) from holding Independence Realty Trust or give up 13.89% of portfolio value over 90 days.

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

Independence Realty Trust  vs.  Kinsale Capital Group

Independence Realty Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Independence Realty Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Independence Realty is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Kinsale Capital Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kinsale Capital Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Independence Realty and Kinsale Capital

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

The idea behind Independence Realty Trust and Kinsale Capital 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.