Correlation Between Kilroy Realty and SL Green

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

Diversification Opportunities for Kilroy Realty and SL Green

0.7

Correlation Coefficient

Kilroy Realty  SL Green

Poor diversification

The 3 months correlation between Kilroy and SLG-PI is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Kilroy Realty Corp and SL Green Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SL Green Realty 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 SL Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SL Green Realty has no effect on the direction of Kilroy Realty i.e., Kilroy Realty and SL Green go up and down completely randomly.

Pair Corralation between Kilroy Realty and SL Green

Considering the 90-day investment horizon Kilroy Realty Corp is expected to generate 2.05 times more return on investment than SL Green. However, Kilroy Realty is 2.05 times more volatile than SL Green Realty. It trades about 0.17 of its potential returns per unit of risk. SL Green Realty is currently generating about 0.15 per unit of risk. If you would invest  3,475  in Kilroy Realty Corp on September 3, 2024 and sell it today you would earn a total of  678.00  from holding Kilroy Realty Corp or generate 19.51% 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.  SL Green Realty

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.

SL Green Realty

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SL Green Realty are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical and fundamental indicators, SL Green may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Kilroy Realty and SL Green

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

The idea behind Kilroy Realty Corp and SL Green Realty 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.