Correlation Between CN MODERN and Kilroy Realty

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

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

Diversification Opportunities for CN MODERN and Kilroy Realty

0.6

Correlation Coefficient

CN MODERN  Kilroy Realty

Poor diversification

The 3 months correlation between 07M and Kilroy is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding CN MODERN DAIRY 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 CN MODERN 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 CN MODERN DAIRY 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 CN MODERN i.e., CN MODERN and Kilroy Realty go up and down completely randomly.

Pair Corralation between CN MODERN and Kilroy Realty

Assuming the 90 days trading horizon CN MODERN DAIRY is expected to under-perform the Kilroy Realty. But the stock apears to be less risky and, when comparing its historical volatility, CN MODERN DAIRY is 1.16 times less risky than Kilroy Realty. The stock trades about -0.01 of its potential returns per unit of risk. The Kilroy Realty Corp is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  3,600  in Kilroy Realty Corp on September 3, 2024 and sell it today you would earn a total of  260.00  from holding Kilroy Realty Corp or generate 7.22% return on investment over 90 days.

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

CN MODERN DAIRY  vs.  Kilroy Realty Corp

CN MODERN DAIRY

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CN MODERN DAIRY are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady primary indicators, CN MODERN exhibited 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 CN MODERN and Kilroy Realty

The main advantage of trading using opposite CN MODERN and Kilroy Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CN MODERN 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 CN MODERN DAIRY 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.