Correlation Between Kite Realty and Regency Centers

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

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

Diversification Opportunities for Kite Realty and Regency Centers

0.79

Correlation Coefficient

Kite Realty  Regency Centers

Poor diversification

The 3 months correlation between Kite and Regency is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Kite Realty Group and Regency Centers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regency Centers and Kite 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 Kite Realty Group are associated (or correlated) with Regency Centers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regency Centers has no effect on the direction of Kite Realty i.e., Kite Realty and Regency Centers go up and down completely randomly.

Pair Corralation between Kite Realty and Regency Centers

Considering the 90-day investment horizon Kite Realty Group is expected to generate 1.06 times more return on investment than Regency Centers. However, Kite Realty is 1.06 times more volatile than Regency Centers. It trades about 0.12 of its potential returns per unit of risk. Regency Centers is currently generating about 0.09 per unit of risk. 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

Kite Realty Group  vs.  Regency Centers

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.

Regency Centers

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Regency Centers are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Regency Centers is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Kite Realty and Regency Centers

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

The idea behind Kite Realty Group and Regency Centers 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 Stocks Directory module to find actively traded stocks across global markets.