Correlation Between Kimco Realty and National Retail

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

By analyzing existing cross correlation between Kimco Realty and National Retail Properties, you can compare the effects of market volatilities on Kimco Realty and National Retail 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 National Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kimco Realty and National Retail.

Diversification Opportunities for Kimco Realty and National Retail

0.7

Correlation Coefficient

Kimco Realty  National Retail

Poor diversification

The 3 months correlation between Kimco and National is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Kimco Realty and National Retail Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Retail Prop 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 National Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Retail Prop has no effect on the direction of Kimco Realty i.e., Kimco Realty and National Retail go up and down completely randomly.

Pair Corralation between Kimco Realty and National Retail

Considering the 90-day investment horizon Kimco Realty is expected to under-perform the National Retail. But the stock apears to be less risky and, when comparing its historical volatility, Kimco Realty is 1.63 times less risky than National Retail. The stock trades about -0.24 of its potential returns per unit of risk. The National Retail Properties is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  3,963  in National Retail Properties on November 29, 2024 and sell it today you would earn a total of  235.00  from holding National Retail Properties or generate 5.93% return on investment over 90 days.

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

Kimco Realty  vs.  National Retail Properties

Kimco Realty

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kimco Realty 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 forward indicators remain very healthy which may send shares a bit higher in March 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

National Retail Prop

Risk-Adjusted Performance

Very Weak

Over the last 90 days National Retail Properties has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, National Retail is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Kimco Realty and National Retail

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

The idea behind Kimco Realty and National Retail Properties 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.