Correlation Between United and Kite Realty

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

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

Diversification Opportunities for United and Kite Realty

-0.17

Correlation Coefficient

United  Kite Realty

Good diversification

The 3 months correlation between United and Kite is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding United States Cellular 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 United 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 United States Cellular 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 United i.e., United and Kite Realty go up and down completely randomly.

Pair Corralation between United and Kite Realty

Assuming the 90 days trading horizon United States Cellular is expected to under-perform the Kite Realty. In addition to that, United is 1.51 times more volatile than Kite Realty Group. It trades about -0.14 of its total potential returns per unit of risk. Kite Realty Group is currently generating about -0.01 per unit of volatility. If you would invest  2,656  in Kite Realty Group on September 13, 2024 and sell it today you would lose (28.00) from holding Kite Realty Group or give up 1.05% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.75%
Values	Daily Returns

United States Cellular  vs.  Kite Realty Group

United States Cellular

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United States Cellular has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for United States Cellular 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 United and Kite Realty

The main advantage of trading using opposite United and Kite Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United 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 United States Cellular 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.

Check out your portfolio center.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.