Correlation Between Kite Realty and LXP Industrial

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

Diversification Opportunities for Kite Realty and LXP Industrial

-0.58

Correlation Coefficient

Kite Realty  LXP Industrial

Excellent diversification

The 3 months correlation between Kite and LXP is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Kite Realty Group and LXP Industrial Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LXP Industrial Trust 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 LXP Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LXP Industrial Trust has no effect on the direction of Kite Realty i.e., Kite Realty and LXP Industrial go up and down completely randomly.

Pair Corralation between Kite Realty and LXP Industrial

Considering the 90-day investment horizon Kite Realty Group is expected to under-perform the LXP Industrial. In addition to that, Kite Realty is 1.07 times more volatile than LXP Industrial Trust. It trades about -0.1 of its total potential returns per unit of risk. LXP Industrial Trust is currently generating about 0.09 per unit of volatility. If you would invest  818.00  in LXP Industrial Trust on December 26, 2024 and sell it today you would earn a total of  70.00  from holding LXP Industrial Trust or generate 8.56% return on investment over 90 days.

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

Kite Realty Group  vs.  LXP Industrial Trust

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 unsteady 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.

LXP Industrial Trust

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in LXP Industrial Trust are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, LXP Industrial may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Kite Realty and LXP Industrial

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

The idea behind Kite Realty Group and LXP Industrial Trust 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.