Correlation Between Kite Realty and Douglas Emmett

Can any of the company-specific risk be diversified away by investing in both Kite Realty and Douglas Emmett 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 Kite Realty and Douglas Emmett into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kite Realty Group and Douglas Emmett, you can compare the effects of market volatilities on Kite Realty and Douglas Emmett 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 Kite Realty with a short position of Douglas Emmett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kite Realty and Douglas Emmett.

Diversification Opportunities for Kite Realty and Douglas Emmett

0.88

Correlation Coefficient

Kite Realty  Douglas Emmett

Very poor diversification

The 3 months correlation between Kite and Douglas is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Kite Realty Group and Douglas Emmett in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Douglas Emmett and Kite 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 Kite Realty Group are associated (or correlated) with Douglas Emmett. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Douglas Emmett has no effect on the direction of Kite Realty i.e., Kite Realty and Douglas Emmett go up and down completely randomly.

Pair Corralation between Kite Realty and Douglas Emmett

Considering the 90-day investment horizon Kite Realty Group is expected to generate 0.74 times more return on investment than Douglas Emmett. However, Kite Realty Group is 1.34 times less risky than Douglas Emmett. It trades about -0.08 of its potential returns per unit of risk. Douglas Emmett is currently generating about -0.07 per unit of risk. If you would invest  2,467  in Kite Realty Group on December 28, 2024 and sell it today you would lose (208.00) from holding Kite Realty Group or give up 8.43% of portfolio value over 90 days.

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

Kite Realty Group  vs.  Douglas Emmett

Kite Realty Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kite Realty Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Douglas Emmett

Risk-Adjusted Performance

Very Weak

Over the last 90 days Douglas Emmett has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Kite Realty and Douglas Emmett

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

The idea behind Kite Realty Group and Douglas Emmett 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..