Correlation Between Kite Realty and Welltower

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

Diversification Opportunities for Kite Realty and Welltower

-0.73

Correlation Coefficient

Kite Realty  Welltower

Pay attention - limited upside

The 3 months correlation between Kite and Welltower is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Kite Realty Group and Welltower in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Welltower 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 Welltower. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Welltower has no effect on the direction of Kite Realty i.e., Kite Realty and Welltower go up and down completely randomly.

Pair Corralation between Kite Realty and Welltower

Considering the 90-day investment horizon Kite Realty Group is expected to under-perform the Welltower. In addition to that, Kite Realty is 1.13 times more volatile than Welltower. It trades about -0.09 of its total potential returns per unit of risk. Welltower is currently generating about 0.24 per unit of volatility. If you would invest  12,436  in Welltower on December 30, 2024 and sell it today you would earn a total of  2,906  from holding Welltower or generate 23.37% return on investment over 90 days.

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

Kite Realty Group  vs.  Welltower

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.

Welltower

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Welltower are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite quite weak essential indicators, Welltower disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kite Realty and Welltower

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

The idea behind Kite Realty Group and Welltower 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..