Correlation Between Kilroy Realty and Brandywine Realty

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

Diversification Opportunities for Kilroy Realty and Brandywine Realty

0.65

Correlation Coefficient

Kilroy Realty  Brandywine Realty

Poor diversification

The 3 months correlation between Kilroy and Brandywine is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Kilroy Realty Corp and Brandywine Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brandywine Realty Trust 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 Brandywine Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brandywine Realty Trust has no effect on the direction of Kilroy Realty i.e., Kilroy Realty and Brandywine Realty go up and down completely randomly.

Pair Corralation between Kilroy Realty and Brandywine Realty

Considering the 90-day investment horizon Kilroy Realty Corp is expected to generate 0.65 times more return on investment than Brandywine Realty. However, Kilroy Realty Corp is 1.53 times less risky than Brandywine Realty. It trades about 0.17 of its potential returns per unit of risk. Brandywine Realty Trust is currently generating about 0.08 per unit of risk. If you would invest  3,475  in Kilroy Realty Corp on September 2, 2024 and sell it today you would earn a total of  678.00  from holding Kilroy Realty Corp or generate 19.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Kilroy Realty Corp  vs.  Brandywine Realty Trust

Kilroy Realty Corp

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kilroy Realty Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Kilroy Realty exhibited solid returns over the last few months and may actually be approaching a breakup point.

Brandywine Realty Trust

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Brandywine Realty Trust are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent fundamental indicators, Brandywine Realty displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kilroy Realty and Brandywine Realty

The main advantage of trading using opposite Kilroy Realty and Brandywine Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kilroy Realty position performs unexpectedly, Brandywine Realty 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 Brandywine Realty will offset losses from the drop in Brandywine Realty's long position.

The idea behind Kilroy Realty Corp and Brandywine Realty Trust 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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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.