Correlation Between Kennedy Wilson and Realty Income
Can any of the company-specific risk be diversified away by investing in both Kennedy Wilson and Realty Income 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 Kennedy Wilson and Realty Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kennedy Wilson Holdings and Realty Income, you can compare the effects of market volatilities on Kennedy Wilson and Realty Income 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 Kennedy Wilson with a short position of Realty Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kennedy Wilson and Realty Income.
Diversification Opportunities for Kennedy Wilson and Realty Income
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Kennedy and Realty is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Kennedy Wilson Holdings and Realty Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Realty Income and Kennedy Wilson 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 Kennedy Wilson Holdings are associated (or correlated) with Realty Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Realty Income has no effect on the direction of Kennedy Wilson i.e., Kennedy Wilson and Realty Income go up and down completely randomly.
Pair Corralation between Kennedy Wilson and Realty Income
Allowing for the 90-day total investment horizon Kennedy Wilson Holdings is expected to generate 2.07 times more return on investment than Realty Income. However, Kennedy Wilson is 2.07 times more volatile than Realty Income. It trades about 0.07 of its potential returns per unit of risk. Realty Income is currently generating about -0.21 per unit of risk. If you would invest 1,113 in Kennedy Wilson Holdings on August 29, 2024 and sell it today you would earn a total of 35.00 from holding Kennedy Wilson Holdings or generate 3.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kennedy Wilson Holdings vs. Realty Income
Performance |
| Timeline |
| Kennedy Wilson Holdings |
| Realty Income |
Kennedy Wilson and Realty Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kennedy Wilson and Realty Income
The main advantage of trading using opposite Kennedy Wilson and Realty Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kennedy Wilson position performs unexpectedly, Realty Income 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 Realty Income will offset losses from the drop in Realty Income's long position.The idea behind Kennedy Wilson Holdings and Realty Income 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.| Realty Income vs. Federal Realty Investment | Realty Income vs. Macerich Company | Realty Income vs. National Retail Properties | Realty Income vs. Kimco Realty |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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