Correlation Between Oracle and Kilroy Realty

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

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

Diversification Opportunities for Oracle and Kilroy Realty

0.81

Correlation Coefficient

Oracle  Kilroy Realty

Very poor diversification

The 3 months correlation between Oracle and Kilroy is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Oracle and Kilroy Realty Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kilroy Realty Corp and Oracle 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 Oracle are associated (or correlated) with Kilroy Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kilroy Realty Corp has no effect on the direction of Oracle i.e., Oracle and Kilroy Realty go up and down completely randomly.

Pair Corralation between Oracle and Kilroy Realty

Given the investment horizon of 90 days Oracle is expected to generate 1.11 times less return on investment than Kilroy Realty. But when comparing it to its historical volatility, Oracle is 1.01 times less risky than Kilroy Realty. It trades about 0.11 of its potential returns per unit of risk. Kilroy Realty Corp is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  2,860  in Kilroy Realty Corp on September 12, 2024 and sell it today you would earn a total of  980.00  from holding Kilroy Realty Corp or generate 34.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	97.66%
Values	Daily Returns

Oracle  vs.  Kilroy Realty Corp

Oracle

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Oracle are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite abnormal fundamental indicators, Oracle disclosed solid returns over the last few months and may actually be approaching a breakup point.

Kilroy Realty Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kilroy Realty Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Kilroy Realty reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Oracle and Kilroy Realty

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

The idea behind Oracle and Kilroy Realty Corp 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.