Correlation Between Urban Edge and Kite Realty

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

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

Diversification Opportunities for Urban Edge and Kite Realty

0.83

Correlation Coefficient

Urban Edge  Kite Realty

Very poor diversification

The 3 months correlation between Urban and Kite is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Urban Edge Properties 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 Urban Edge 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 Urban Edge Properties 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 Urban Edge i.e., Urban Edge and Kite Realty go up and down completely randomly.

Pair Corralation between Urban Edge and Kite Realty

Allowing for the 90-day total investment horizon Urban Edge Properties is expected to under-perform the Kite Realty. But the stock apears to be less risky and, when comparing its historical volatility, Urban Edge Properties is 1.09 times less risky than Kite Realty. The stock trades about -0.12 of its potential returns per unit of risk. The Kite Realty Group is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  2,500  in Kite Realty Group on December 26, 2024 and sell it today you would lose (234.00) from holding Kite Realty Group or give up 9.36% of portfolio value over 90 days.

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

Urban Edge Properties  vs.  Kite Realty Group

Urban Edge Properties

Risk-Adjusted Performance

Very Weak

Over the last 90 days Urban Edge Properties has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

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 Urban Edge and Kite Realty

The main advantage of trading using opposite Urban Edge and Kite Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Urban Edge 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 Urban Edge Properties 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.

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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.