Correlation Between Kilroy Realty and Alexandria Real

Can any of the company-specific risk be diversified away by investing in both Kilroy Realty and Alexandria Real 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 Alexandria Real 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 Alexandria Real Estate, you can compare the effects of market volatilities on Kilroy Realty and Alexandria Real 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 Alexandria Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kilroy Realty and Alexandria Real.

Diversification Opportunities for Kilroy Realty and Alexandria Real

0.6

Correlation Coefficient

Kilroy Realty  Alexandria Real

Poor diversification

The 3 months correlation between Kilroy and Alexandria is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Kilroy Realty Corp and Alexandria Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alexandria Real Estate 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 Alexandria Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alexandria Real Estate has no effect on the direction of Kilroy Realty i.e., Kilroy Realty and Alexandria Real go up and down completely randomly.

Pair Corralation between Kilroy Realty and Alexandria Real

Considering the 90-day investment horizon Kilroy Realty Corp is expected to under-perform the Alexandria Real. In addition to that, Kilroy Realty is 1.45 times more volatile than Alexandria Real Estate. It trades about -0.12 of its total potential returns per unit of risk. Alexandria Real Estate is currently generating about -0.07 per unit of volatility. If you would invest  10,874  in Alexandria Real Estate on November 28, 2024 and sell it today you would lose (781.00) from holding Alexandria Real Estate or give up 7.18% of portfolio value over 90 days.

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

Kilroy Realty Corp  vs.  Alexandria Real Estate

Kilroy Realty Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kilroy Realty Corp 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 basic indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Alexandria Real Estate

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alexandria Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Kilroy Realty and Alexandria Real

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

The idea behind Kilroy Realty Corp and Alexandria Real Estate 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.