Correlation Between Kilroy Realty and One Liberty

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

Diversification Opportunities for Kilroy Realty and One Liberty

0.61

Correlation Coefficient

Kilroy Realty  One Liberty

Poor diversification

The 3 months correlation between Kilroy and One is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Kilroy Realty Corp and One Liberty Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on One Liberty Properties 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 One Liberty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of One Liberty Properties has no effect on the direction of Kilroy Realty i.e., Kilroy Realty and One Liberty go up and down completely randomly.

Pair Corralation between Kilroy Realty and One Liberty

Considering the 90-day investment horizon Kilroy Realty is expected to generate 3.45 times less return on investment than One Liberty. In addition to that, Kilroy Realty is 1.08 times more volatile than One Liberty Properties. It trades about 0.09 of its total potential returns per unit of risk. One Liberty Properties is currently generating about 0.35 per unit of volatility. If you would invest  2,670  in One Liberty Properties on September 1, 2024 and sell it today you would earn a total of  337.00  from holding One Liberty Properties or generate 12.62% return on investment over 90 days.

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

Kilroy Realty Corp  vs.  One Liberty Properties

Kilroy Realty Corp

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kilroy Realty Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Kilroy Realty exhibited solid returns over the last few months and may actually be approaching a breakup point.

One Liberty Properties

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in One Liberty Properties are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent essential indicators, One Liberty reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kilroy Realty and One Liberty

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

The idea behind Kilroy Realty Corp and One Liberty 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.