Correlation Between Kilroy Realty and Office Properties

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

Diversification Opportunities for Kilroy Realty and Office Properties

0.52

Correlation Coefficient

Kilroy Realty  Office Properties

Very weak diversification

The 3 months correlation between Kilroy and Office is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Kilroy Realty Corp and Office Properties Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Office Properties Income 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 Office Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Office Properties Income has no effect on the direction of Kilroy Realty i.e., Kilroy Realty and Office Properties go up and down completely randomly.

Pair Corralation between Kilroy Realty and Office Properties

Considering the 90-day investment horizon Kilroy Realty Corp is expected to generate 0.46 times more return on investment than Office Properties. However, Kilroy Realty Corp is 2.2 times less risky than Office Properties. It trades about -0.13 of its potential returns per unit of risk. Office Properties Income is currently generating about -0.21 per unit of risk. If you would invest  3,996  in Kilroy Realty Corp on December 28, 2024 and sell it today you would lose (666.00) from holding Kilroy Realty Corp or give up 16.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Kilroy Realty Corp  vs.  Office Properties Income

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 April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Office Properties Income

Risk-Adjusted Performance

Very Weak

Over the last 90 days Office Properties Income has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Kilroy Realty and Office Properties

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

The idea behind Kilroy Realty Corp and Office Properties Income 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.