Correlation Between Kimco Realty and Realty Income

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

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

Diversification Opportunities for Kimco Realty and Realty Income

0.45

Correlation Coefficient

Kimco Realty  Realty Income

Very weak diversification

The 3 months correlation between Kimco and Realty is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Kimco Realty and Realty Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Realty Income and Kimco Realty 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 Kimco Realty are associated (or correlated) with Realty Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Realty Income has no effect on the direction of Kimco Realty i.e., Kimco Realty and Realty Income go up and down completely randomly.

Pair Corralation between Kimco Realty and Realty Income

Assuming the 90 days trading horizon Kimco Realty is expected to generate 3.56 times less return on investment than Realty Income. But when comparing it to its historical volatility, Kimco Realty is 1.38 times less risky than Realty Income. It trades about 0.01 of its potential returns per unit of risk. Realty Income is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  5,146  in Realty Income on September 4, 2024 and sell it today you would earn a total of  457.00  from holding Realty Income or generate 8.88% return on investment over 90 days.

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

Kimco Realty  vs.  Realty Income

Kimco Realty

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Kimco Realty has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent primary indicators, Kimco Realty is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Realty Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Realty Income has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Kimco Realty and Realty Income

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

The idea behind Kimco Realty and Realty Income 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.