Correlation Between Kilroy Realty and First Trust
Can any of the company-specific risk be diversified away by investing in both Kilroy Realty and First Trust 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 Kilroy Realty and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kilroy Realty Corp and First Trust Indxx, you can compare the effects of market volatilities on Kilroy Realty and First Trust 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 Kilroy Realty with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kilroy Realty and First Trust.
Diversification Opportunities for Kilroy Realty and First Trust
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kilroy and First is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Kilroy Realty Corp and First Trust Indxx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Indxx and Kilroy 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 Kilroy Realty Corp are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Indxx has no effect on the direction of Kilroy Realty i.e., Kilroy Realty and First Trust go up and down completely randomly.
Pair Corralation between Kilroy Realty and First Trust
Considering the 90-day investment horizon Kilroy Realty Corp is expected to generate 1.98 times more return on investment than First Trust. However, Kilroy Realty is 1.98 times more volatile than First Trust Indxx. It trades about 0.06 of its potential returns per unit of risk. First Trust Indxx is currently generating about 0.06 per unit of risk. If you would invest 2,721 in Kilroy Realty Corp on September 1, 2024 and sell it today you would earn a total of 1,432 from holding Kilroy Realty Corp or generate 52.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Kilroy Realty Corp vs. First Trust Indxx
Performance |
| Timeline |
| Kilroy Realty Corp |
| First Trust Indxx |
Kilroy Realty and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kilroy Realty and First Trust
The main advantage of trading using opposite Kilroy Realty and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kilroy Realty position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.| Kilroy Realty vs. Boston Properties | Kilroy Realty vs. Douglas Emmett | Kilroy Realty vs. Alexandria Real Estate | Kilroy Realty vs. Vornado Realty Trust |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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