Correlation Between Alexandria Real and KBS Real
Can any of the company-specific risk be diversified away by investing in both Alexandria Real and KBS Real 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 Alexandria Real and KBS Real into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alexandria Real Estate and KBS Real Estate, you can compare the effects of market volatilities on Alexandria Real and KBS Real 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 Alexandria Real with a short position of KBS Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alexandria Real and KBS Real.
Diversification Opportunities for Alexandria Real and KBS Real
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Alexandria and KBS is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Alexandria Real Estate and KBS Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KBS Real Estate and Alexandria Real 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 Alexandria Real Estate are associated (or correlated) with KBS Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KBS Real Estate has no effect on the direction of Alexandria Real i.e., Alexandria Real and KBS Real go up and down completely randomly.
Pair Corralation between Alexandria Real and KBS Real
Considering the 90-day investment horizon Alexandria Real Estate is expected to generate 0.3 times more return on investment than KBS Real. However, Alexandria Real Estate is 3.34 times less risky than KBS Real. It trades about -0.01 of its potential returns per unit of risk. KBS Real Estate is currently generating about -0.32 per unit of risk. If you would invest 11,086 in Alexandria Real Estate on September 2, 2024 and sell it today you would lose (63.00) from holding Alexandria Real Estate or give up 0.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alexandria Real Estate vs. KBS Real Estate
Performance |
| Timeline |
| Alexandria Real Estate |
| KBS Real Estate |
Alexandria Real and KBS Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alexandria Real and KBS Real
The main advantage of trading using opposite Alexandria Real and KBS Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alexandria Real position performs unexpectedly, KBS Real 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 KBS Real will offset losses from the drop in KBS Real's long position.| Alexandria Real vs. Vornado Realty Trust | Alexandria Real vs. SL Green Realty | Alexandria Real vs. Kilroy Realty Corp | Alexandria Real vs. Highwoods Properties |
| KBS Real vs. Highwoods Properties | KBS Real vs. Piedmont Office Realty | KBS Real vs. Douglas Emmett | KBS Real vs. Kilroy Realty Corp |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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