Correlation Between Realty Income and Kimco Realty

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

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

Diversification Opportunities for Realty Income and Kimco Realty

-0.65

Correlation Coefficient

Realty Income  Kimco Realty

Excellent diversification

The 3 months correlation between Realty and Kimco is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Realty Income and Kimco Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kimco Realty and Realty Income 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 Realty Income are associated (or correlated) with Kimco Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kimco Realty has no effect on the direction of Realty Income i.e., Realty Income and Kimco Realty go up and down completely randomly.

Pair Corralation between Realty Income and Kimco Realty

Taking into account the 90-day investment horizon Realty Income is expected to generate 7.04 times less return on investment than Kimco Realty. But when comparing it to its historical volatility, Realty Income is 1.26 times less risky than Kimco Realty. It trades about 0.01 of its potential returns per unit of risk. Kimco Realty is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,803  in Kimco Realty on August 31, 2024 and sell it today you would earn a total of  754.00  from holding Kimco Realty or generate 41.82% return on investment over 90 days.

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

Realty Income  vs.  Kimco Realty

Realty Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Realty Income has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Realty Income is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Kimco Realty

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kimco Realty are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward indicators, Kimco Realty may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Realty Income and Kimco Realty

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

The idea behind Realty Income and Kimco Realty 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.

Check out your portfolio center.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.