Correlation Between Kilroy Realty and Armada Hflr

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

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

Diversification Opportunities for Kilroy Realty and Armada Hflr

0.19

Correlation Coefficient

Kilroy Realty  Armada Hflr

Average diversification

The 3 months correlation between Kilroy and Armada is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Kilroy Realty Corp and Armada Hflr Pr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Armada Hflr Pr and Kilroy 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 Kilroy Realty Corp are associated (or correlated) with Armada Hflr. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Armada Hflr Pr has no effect on the direction of Kilroy Realty i.e., Kilroy Realty and Armada Hflr go up and down completely randomly.

Pair Corralation between Kilroy Realty and Armada Hflr

Considering the 90-day investment horizon Kilroy Realty Corp is expected to generate 1.87 times more return on investment than Armada Hflr. However, Kilroy Realty is 1.87 times more volatile than Armada Hflr Pr. It trades about -0.13 of its potential returns per unit of risk. Armada Hflr Pr is currently generating about -0.24 per unit of risk. If you would invest  4,104  in Kilroy Realty Corp on October 10, 2024 and sell it today you would lose (305.00) from holding Kilroy Realty Corp or give up 7.43% of portfolio value over 90 days.

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

Kilroy Realty Corp  vs.  Armada Hflr Pr

Kilroy Realty Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kilroy Realty Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Kilroy Realty is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Armada Hflr Pr

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Armada Hflr Pr has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Kilroy Realty and Armada Hflr

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

The idea behind Kilroy Realty Corp and Armada Hflr Pr 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.