Correlation Between Realty Income and Klpierre

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

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

Diversification Opportunities for Realty Income and Klpierre

0.81

Correlation Coefficient

Realty Income  Klpierre

Very poor diversification

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

Pair Corralation between Realty Income and Klpierre

Assuming the 90 days horizon Realty Income is expected to generate 1.78 times less return on investment than Klpierre. In addition to that, Realty Income is 1.13 times more volatile than Klpierre SA. It trades about 0.04 of its total potential returns per unit of risk. Klpierre SA is currently generating about 0.07 per unit of volatility. If you would invest  2,508  in Klpierre SA on September 22, 2024 and sell it today you would earn a total of  224.00  from holding Klpierre SA or generate 8.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.24%
Values	Daily Returns

Realty Income  vs.  Klpierre SA

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. Despite latest fragile 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.

Klpierre SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Klpierre SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile 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.

Pair Trading with Realty Income and Klpierre

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

The idea behind Realty Income and Klpierre SA 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.