Correlation Between Kite Realty and CONSTELLATION

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

Diversification Opportunities for Kite Realty and CONSTELLATION

0.67

Correlation Coefficient

Kite Realty  CONSTELLATION

Poor diversification

The 3 months correlation between Kite and CONSTELLATION is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Kite Realty Group and CONSTELLATION BRANDS INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CONSTELLATION BRANDS INC 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 CONSTELLATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CONSTELLATION BRANDS INC has no effect on the direction of Kite Realty i.e., Kite Realty and CONSTELLATION go up and down completely randomly.

Pair Corralation between Kite Realty and CONSTELLATION

Considering the 90-day investment horizon Kite Realty Group is expected to under-perform the CONSTELLATION. In addition to that, Kite Realty is 2.02 times more volatile than CONSTELLATION BRANDS INC. It trades about -0.21 of its total potential returns per unit of risk. CONSTELLATION BRANDS INC is currently generating about 0.07 per unit of volatility. If you would invest  9,206  in CONSTELLATION BRANDS INC on October 21, 2024 and sell it today you would earn a total of  68.00  from holding CONSTELLATION BRANDS INC or generate 0.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	94.74%
Values	Daily Returns

Kite Realty Group  vs.  CONSTELLATION BRANDS INC

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 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.

CONSTELLATION BRANDS INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CONSTELLATION BRANDS INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CONSTELLATION is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Kite Realty and CONSTELLATION

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

The idea behind Kite Realty Group and CONSTELLATION BRANDS INC 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.