Correlation Between Kite Realty and PETROLEOS

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Can any of the company-specific risk be diversified away by investing in both Kite Realty and PETROLEOS 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 PETROLEOS 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 PETROLEOS MEXICANOS 95, you can compare the effects of market volatilities on Kite Realty and PETROLEOS 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 PETROLEOS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kite Realty and PETROLEOS.

Diversification Opportunities for Kite Realty and PETROLEOS

0.8
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Kite and PETROLEOS is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Kite Realty Group and PETROLEOS MEXICANOS 95 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PETROLEOS MEXICANOS 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 PETROLEOS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PETROLEOS MEXICANOS has no effect on the direction of Kite Realty i.e., Kite Realty and PETROLEOS go up and down completely randomly.

Pair Corralation between Kite Realty and PETROLEOS

Considering the 90-day investment horizon Kite Realty Group is expected to generate 0.62 times more return on investment than PETROLEOS. However, Kite Realty Group is 1.61 times less risky than PETROLEOS. It trades about 0.05 of its potential returns per unit of risk. PETROLEOS MEXICANOS 95 is currently generating about 0.0 per unit of risk. If you would invest  2,015  in Kite Realty Group on September 3, 2024 and sell it today you would earn a total of  742.00  from holding Kite Realty Group or generate 36.82% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy42.63%
ValuesDaily Returns

Kite Realty Group  vs.  PETROLEOS MEXICANOS 95

 Performance 
       Timeline  
Kite Realty Group 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Kite Realty Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Kite Realty may actually be approaching a critical reversion point that can send shares even higher in January 2025.
PETROLEOS MEXICANOS 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days PETROLEOS MEXICANOS 95 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak 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 PETROLEOS MEXICANOS 95 investors.

Kite Realty and PETROLEOS Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Kite Realty and PETROLEOS

The main advantage of trading using opposite Kite Realty and PETROLEOS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kite Realty position performs unexpectedly, PETROLEOS 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 PETROLEOS will offset losses from the drop in PETROLEOS's long position.
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The idea behind Kite Realty Group and PETROLEOS MEXICANOS 95 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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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..

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