Correlation Between Kimco Realty and Acadia Realty

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

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

Diversification Opportunities for Kimco Realty and Acadia Realty

0.95

Correlation Coefficient

Kimco Realty  Acadia Realty

Almost no diversification

The 3 months correlation between Kimco and Acadia is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Kimco Realty and Acadia Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acadia Realty Trust and Kimco 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 Kimco Realty are associated (or correlated) with Acadia Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acadia Realty Trust has no effect on the direction of Kimco Realty i.e., Kimco Realty and Acadia Realty go up and down completely randomly.

Pair Corralation between Kimco Realty and Acadia Realty

Assuming the 90 days horizon Kimco Realty is expected to under-perform the Acadia Realty. But the stock apears to be less risky and, when comparing its historical volatility, Kimco Realty is 1.23 times less risky than Acadia Realty. The stock trades about -0.27 of its potential returns per unit of risk. The Acadia Realty Trust is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  2,380  in Acadia Realty Trust on September 22, 2024 and sell it today you would lose (60.00) from holding Acadia Realty Trust or give up 2.52% of portfolio value over 90 days.

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

Kimco Realty  vs.  Acadia Realty Trust

Kimco Realty

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kimco Realty are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Kimco Realty may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Acadia Realty Trust

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Acadia Realty Trust are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Acadia Realty reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kimco Realty and Acadia Realty

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

The idea behind Kimco Realty and Acadia Realty Trust 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.