Correlation Between Retail Opportunity and Kimco Realty

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

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

Diversification Opportunities for Retail Opportunity and Kimco Realty

0.9

Correlation Coefficient

Retail Opportunity  Kimco Realty

Almost no diversification

The 3 months correlation between Retail and Kimco is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Retail Opportunity Investments and Kimco Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kimco Realty and Retail Opportunity 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 Retail Opportunity Investments 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 Retail Opportunity i.e., Retail Opportunity and Kimco Realty go up and down completely randomly.

Pair Corralation between Retail Opportunity and Kimco Realty

Given the investment horizon of 90 days Retail Opportunity Investments is expected to generate 1.35 times more return on investment than Kimco Realty. However, Retail Opportunity is 1.35 times more volatile than Kimco Realty. It trades about 0.18 of its potential returns per unit of risk. Kimco Realty is currently generating about 0.16 per unit of risk. If you would invest  1,489  in Retail Opportunity Investments on September 3, 2024 and sell it today you would earn a total of  251.00  from holding Retail Opportunity Investments or generate 16.86% return on investment over 90 days.

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

Retail Opportunity Investments  vs.  Kimco Realty

Retail Opportunity

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Retail Opportunity Investments are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile forward indicators, Retail Opportunity exhibited solid returns over the last few months and may actually be approaching a breakup point.

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 January 2025.

Pair Trading with Retail Opportunity and Kimco Realty

The main advantage of trading using opposite Retail Opportunity and Kimco Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Retail Opportunity 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 Retail Opportunity Investments 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.

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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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.