Correlation Between Kite Realty and Summit Materials
Can any of the company-specific risk be diversified away by investing in both Kite Realty and Summit Materials 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 Kite Realty and Summit Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kite Realty Group and Summit Materials, you can compare the effects of market volatilities on Kite Realty and Summit Materials 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 Kite Realty with a short position of Summit Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kite Realty and Summit Materials.
Diversification Opportunities for Kite Realty and Summit Materials
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kite and Summit is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Kite Realty Group and Summit Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Materials and Kite 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 Kite Realty Group are associated (or correlated) with Summit Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Materials has no effect on the direction of Kite Realty i.e., Kite Realty and Summit Materials go up and down completely randomly.
Pair Corralation between Kite Realty and Summit Materials
Considering the 90-day investment horizon Kite Realty is expected to generate 1.33 times less return on investment than Summit Materials. But when comparing it to its historical volatility, Kite Realty Group is 1.58 times less risky than Summit Materials. It trades about 0.11 of its potential returns per unit of risk. Summit Materials is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 3,445 in Summit Materials on August 24, 2024 and sell it today you would earn a total of 1,719 from holding Summit Materials or generate 49.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kite Realty Group vs. Summit Materials
Performance |
| Timeline |
| Kite Realty Group |
| Summit Materials |
Kite Realty and Summit Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kite Realty and Summit Materials
The main advantage of trading using opposite Kite Realty and Summit Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kite Realty position performs unexpectedly, Summit Materials 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 Summit Materials will offset losses from the drop in Summit Materials' long position.| Kite Realty vs. Site Centers Corp | Kite Realty vs. CBL Associates Properties | Kite Realty vs. Urban Edge Properties | Kite Realty vs. Acadia Realty Trust |
| Summit Materials vs. Martin Marietta Materials | Summit Materials vs. Vulcan Materials | Summit Materials vs. United States Lime | Summit Materials vs. James Hardie Industries |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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