Correlation Between Kite Realty and KeyCorp

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

Diversification Opportunities for Kite Realty and KeyCorp

0.24

Correlation Coefficient

Kite Realty  KeyCorp

Modest diversification

The 3 months correlation between Kite and KeyCorp is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Kite Realty Group and KeyCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KeyCorp 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 KeyCorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KeyCorp has no effect on the direction of Kite Realty i.e., Kite Realty and KeyCorp go up and down completely randomly.

Pair Corralation between Kite Realty and KeyCorp

Considering the 90-day investment horizon Kite Realty Group is expected to generate 1.51 times more return on investment than KeyCorp. However, Kite Realty is 1.51 times more volatile than KeyCorp. It trades about 0.1 of its potential returns per unit of risk. KeyCorp is currently generating about 0.08 per unit of risk. If you would invest  2,175  in Kite Realty Group on September 27, 2024 and sell it today you would earn a total of  354.00  from holding Kite Realty Group or generate 16.28% return on investment over 90 days.

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

Kite Realty Group  vs.  KeyCorp

Kite Realty Group

Risk-Adjusted Performance

0 of 100

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 nearly stable basic indicators, Kite Realty is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

KeyCorp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Kite Realty and KeyCorp

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

The idea behind Kite Realty Group and KeyCorp 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.