Correlation Between Kilroy Realty and LXP Industrial

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

Diversification Opportunities for Kilroy Realty and LXP Industrial

-0.11

Correlation Coefficient

Kilroy Realty  LXP Industrial

Good diversification

The 3 months correlation between Kilroy and LXP is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Kilroy Realty Corp and LXP Industrial Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LXP Industrial Trust 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 LXP Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LXP Industrial Trust has no effect on the direction of Kilroy Realty i.e., Kilroy Realty and LXP Industrial go up and down completely randomly.

Pair Corralation between Kilroy Realty and LXP Industrial

Considering the 90-day investment horizon Kilroy Realty Corp is expected to generate 1.53 times more return on investment than LXP Industrial. However, Kilroy Realty is 1.53 times more volatile than LXP Industrial Trust. It trades about 0.11 of its potential returns per unit of risk. LXP Industrial Trust is currently generating about -0.07 per unit of risk. If you would invest  3,143  in Kilroy Realty Corp on October 8, 2024 and sell it today you would earn a total of  920.00  from holding Kilroy Realty Corp or generate 29.27% return on investment over 90 days.

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

Kilroy Realty Corp  vs.  LXP Industrial Trust

Kilroy Realty Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kilroy Realty Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Kilroy Realty may actually be approaching a critical reversion point that can send shares even higher in February 2025.

LXP Industrial Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LXP Industrial Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Kilroy Realty and LXP Industrial

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

The idea behind Kilroy Realty Corp and LXP Industrial 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.