Correlation Between TRIMBLE and Kite Realty

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

By analyzing existing cross correlation between TRIMBLE INC 475 and Kite Realty Group, you can compare the effects of market volatilities on TRIMBLE 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 TRIMBLE with a short position of Kite Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRIMBLE and Kite Realty.

Diversification Opportunities for TRIMBLE and Kite Realty

0.48

Correlation Coefficient

TRIMBLE  Kite Realty

Very weak diversification

The 3 months correlation between TRIMBLE and Kite is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding TRIMBLE INC 475 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 TRIMBLE 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 TRIMBLE INC 475 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 TRIMBLE i.e., TRIMBLE and Kite Realty go up and down completely randomly.

Pair Corralation between TRIMBLE and Kite Realty

Assuming the 90 days trading horizon TRIMBLE INC 475 is expected to generate 0.29 times more return on investment than Kite Realty. However, TRIMBLE INC 475 is 3.44 times less risky than Kite Realty. It trades about -0.04 of its potential returns per unit of risk. Kite Realty Group is currently generating about -0.06 per unit of risk. If you would invest  9,978  in TRIMBLE INC 475 on September 29, 2024 and sell it today you would lose (59.00) from holding TRIMBLE INC 475 or give up 0.59% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	61.9%
Values	Daily Returns

TRIMBLE INC 475  vs.  Kite Realty Group

TRIMBLE INC 475

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TRIMBLE INC 475 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, TRIMBLE 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

0 of 100

Very Weak

Over the last 90 days Kite Realty Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Kite Realty is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with TRIMBLE and Kite Realty

The main advantage of trading using opposite TRIMBLE and Kite Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TRIMBLE 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 TRIMBLE INC 475 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.