Correlation Between Gladstone Capital and Kite Realty

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

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

Diversification Opportunities for Gladstone Capital and Kite Realty

0.68

Correlation Coefficient

Gladstone Capital  Kite Realty

Poor diversification

The 3 months correlation between Gladstone and Kite is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Gladstone Capital 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 Gladstone Capital 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 Gladstone Capital 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 Gladstone Capital i.e., Gladstone Capital and Kite Realty go up and down completely randomly.

Pair Corralation between Gladstone Capital and Kite Realty

Assuming the 90 days horizon Gladstone Capital is expected to generate 5.67 times less return on investment than Kite Realty. But when comparing it to its historical volatility, Gladstone Capital is 5.79 times less risky than Kite Realty. It trades about 0.13 of its potential returns per unit of risk. Kite Realty Group is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  2,559  in Kite Realty Group on September 3, 2024 and sell it today you would earn a total of  198.00  from holding Kite Realty Group or generate 7.74% return on investment over 90 days.

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

Gladstone Capital  vs.  Kite Realty Group

Gladstone Capital

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gladstone Capital are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental indicators, Gladstone Capital is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Kite Realty Group

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kite Realty Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Kite Realty may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Gladstone Capital and Kite Realty

The main advantage of trading using opposite Gladstone Capital and Kite Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gladstone Capital 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 Gladstone Capital 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.