Correlation Between Simon Property and Kontoor Brands
Can any of the company-specific risk be diversified away by investing in both Simon Property and Kontoor Brands 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 Simon Property and Kontoor Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Simon Property Group and Kontoor Brands, you can compare the effects of market volatilities on Simon Property and Kontoor Brands 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 Simon Property with a short position of Kontoor Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simon Property and Kontoor Brands.
Diversification Opportunities for Simon Property and Kontoor Brands
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Simon and Kontoor is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Simon Property Group and Kontoor Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kontoor Brands and Simon Property 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 Simon Property Group are associated (or correlated) with Kontoor Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kontoor Brands has no effect on the direction of Simon Property i.e., Simon Property and Kontoor Brands go up and down completely randomly.
Pair Corralation between Simon Property and Kontoor Brands
Considering the 90-day investment horizon Simon Property Group is expected to under-perform the Kontoor Brands. But the stock apears to be less risky and, when comparing its historical volatility, Simon Property Group is 1.98 times less risky than Kontoor Brands. The stock trades about -0.07 of its potential returns per unit of risk. The Kontoor Brands is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 8,997 in Kontoor Brands on September 12, 2024 and sell it today you would lose (69.00) from holding Kontoor Brands or give up 0.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Simon Property Group vs. Kontoor Brands
Performance |
| Timeline |
| Simon Property Group |
| Kontoor Brands |
Simon Property and Kontoor Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Simon Property and Kontoor Brands
The main advantage of trading using opposite Simon Property and Kontoor Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simon Property position performs unexpectedly, Kontoor Brands 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 Kontoor Brands will offset losses from the drop in Kontoor Brands' long position.| Simon Property vs. Federal Realty Investment | Simon Property vs. Agree Realty | Simon Property vs. National Retail Properties | Simon Property vs. Kimco Realty |
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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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