Correlation Between ORIX JREIT and Kilroy Realty

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

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

Diversification Opportunities for ORIX JREIT and Kilroy Realty

0.4

Correlation Coefficient

ORIX JREIT  Kilroy Realty

Very weak diversification

The 3 months correlation between ORIX and Kilroy is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding ORIX JREIT INC 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 ORIX JREIT 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 ORIX JREIT INC 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 ORIX JREIT i.e., ORIX JREIT and Kilroy Realty go up and down completely randomly.

Pair Corralation between ORIX JREIT and Kilroy Realty

Assuming the 90 days horizon ORIX JREIT INC is expected to generate 0.52 times more return on investment than Kilroy Realty. However, ORIX JREIT INC is 1.92 times less risky than Kilroy Realty. It trades about 0.22 of its potential returns per unit of risk. Kilroy Realty Corp is currently generating about 0.0 per unit of risk. If you would invest  95,500  in ORIX JREIT INC on September 12, 2024 and sell it today you would earn a total of  4,500  from holding ORIX JREIT INC or generate 4.71% return on investment over 90 days.

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

ORIX JREIT INC  vs.  Kilroy Realty Corp

ORIX JREIT INC

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ORIX JREIT INC are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, ORIX JREIT is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the 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 ORIX JREIT and Kilroy Realty

The main advantage of trading using opposite ORIX JREIT and Kilroy Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ORIX JREIT 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 ORIX JREIT INC 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.