Correlation Between Kilroy Realty and National Health

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

Diversification Opportunities for Kilroy Realty and National Health

-0.57

Correlation Coefficient

Kilroy Realty  National Health

Excellent diversification

The 3 months correlation between Kilroy and National is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Kilroy Realty Corp and National Health Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Health Investors 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 National Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Health Investors has no effect on the direction of Kilroy Realty i.e., Kilroy Realty and National Health go up and down completely randomly.

Pair Corralation between Kilroy Realty and National Health

Considering the 90-day investment horizon Kilroy Realty Corp is expected to generate 1.29 times more return on investment than National Health. However, Kilroy Realty is 1.29 times more volatile than National Health Investors. It trades about 0.18 of its potential returns per unit of risk. National Health Investors is currently generating about -0.03 per unit of risk. If you would invest  3,475  in Kilroy Realty Corp on August 31, 2024 and sell it today you would earn a total of  730.00  from holding Kilroy Realty Corp or generate 21.01% return on investment over 90 days.

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

Kilroy Realty Corp  vs.  National Health Investors

Kilroy Realty Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kilroy Realty Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Kilroy Realty exhibited solid returns over the last few months and may actually be approaching a breakup point.

National Health Investors

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days National Health Investors has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, National Health is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Kilroy Realty and National Health

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

The idea behind Kilroy Realty Corp and National Health Investors 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.

Check out your portfolio center.

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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.