Correlation Between Simon Property and Kite Realty

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

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

Diversification Opportunities for Simon Property and Kite Realty

-0.03

Correlation Coefficient

Simon Property  Kite Realty

Good diversification

The 3 months correlation between Simon and Kite is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Simon Property Group and Kite Realty Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kite Realty Group and Simon Property 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 Simon Property Group are associated (or correlated) with Kite Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kite Realty Group has no effect on the direction of Simon Property i.e., Simon Property and Kite Realty go up and down completely randomly.

Pair Corralation between Simon Property and Kite Realty

Considering the 90-day investment horizon Simon Property Group is expected to generate 0.89 times more return on investment than Kite Realty. However, Simon Property Group is 1.12 times less risky than Kite Realty. It trades about 0.0 of its potential returns per unit of risk. Kite Realty Group is currently generating about -0.09 per unit of risk. If you would invest  16,990  in Simon Property Group on December 27, 2024 and sell it today you would lose (145.00) from holding Simon Property Group or give up 0.85% of portfolio value over 90 days.

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

Simon Property Group  vs.  Kite Realty Group

Simon Property Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Simon Property Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Simon Property is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

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.

Pair Trading with Simon Property and Kite Realty

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

The idea behind Simon Property Group and Kite Realty Group 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 Stocks Directory module to find actively traded stocks across global markets.