Correlation Between Superior Plus and Kilroy Realty

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

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

Diversification Opportunities for Superior Plus and Kilroy Realty

-0.61

Correlation Coefficient

Superior Plus  Kilroy Realty

Excellent diversification

The 3 months correlation between Superior and Kilroy is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Superior Plus Corp 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 Superior Plus 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 Superior Plus Corp 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 Superior Plus i.e., Superior Plus and Kilroy Realty go up and down completely randomly.

Pair Corralation between Superior Plus and Kilroy Realty

Assuming the 90 days horizon Superior Plus Corp is expected to under-perform the Kilroy Realty. In addition to that, Superior Plus is 1.75 times more volatile than Kilroy Realty Corp. It trades about -0.04 of its total potential returns per unit of risk. Kilroy Realty Corp is currently generating about 0.18 per unit of volatility. If you would invest  3,131  in Kilroy Realty Corp on September 4, 2024 and sell it today you would earn a total of  769.00  from holding Kilroy Realty Corp or generate 24.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Superior Plus Corp  vs.  Kilroy Realty Corp

Superior Plus Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Superior Plus Corp 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.

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 Superior Plus and Kilroy Realty

The main advantage of trading using opposite Superior Plus and Kilroy Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Superior Plus 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 Superior Plus Corp 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.