Correlation Between KKR REAL and ELLINGTON RESIDMTG

Can any of the company-specific risk be diversified away by investing in both KKR REAL and ELLINGTON RESIDMTG 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 KKR REAL and ELLINGTON RESIDMTG into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between KKR REAL ESTFINTR and ELLINGTON RESIDMTG SBI, you can compare the effects of market volatilities on KKR REAL and ELLINGTON RESIDMTG 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 KKR REAL with a short position of ELLINGTON RESIDMTG. Check out your portfolio center. Please also check ongoing floating volatility patterns of KKR REAL and ELLINGTON RESIDMTG.

Diversification Opportunities for KKR REAL and ELLINGTON RESIDMTG

-0.22

Correlation Coefficient

KKR REAL  ELLINGTON RESIDMTG

Very good diversification

The 3 months correlation between KKR and ELLINGTON is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding KKR REAL ESTFINTR and ELLINGTON RESIDMTG SBI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ELLINGTON RESIDMTG SBI and KKR REAL 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 KKR REAL ESTFINTR are associated (or correlated) with ELLINGTON RESIDMTG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ELLINGTON RESIDMTG SBI has no effect on the direction of KKR REAL i.e., KKR REAL and ELLINGTON RESIDMTG go up and down completely randomly.

Pair Corralation between KKR REAL and ELLINGTON RESIDMTG

Assuming the 90 days horizon KKR REAL ESTFINTR is expected to under-perform the ELLINGTON RESIDMTG. In addition to that, KKR REAL is 1.04 times more volatile than ELLINGTON RESIDMTG SBI. It trades about -0.12 of its total potential returns per unit of risk. ELLINGTON RESIDMTG SBI is currently generating about 0.18 per unit of volatility. If you would invest  575.00  in ELLINGTON RESIDMTG SBI on October 10, 2024 and sell it today you would earn a total of  65.00  from holding ELLINGTON RESIDMTG SBI or generate 11.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.37%
Values	Daily Returns

KKR REAL ESTFINTR  vs.  ELLINGTON RESIDMTG SBI

KKR REAL ESTFINTR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KKR REAL ESTFINTR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, KKR REAL is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

ELLINGTON RESIDMTG SBI

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ELLINGTON RESIDMTG SBI are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ELLINGTON RESIDMTG may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with KKR REAL and ELLINGTON RESIDMTG

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

The idea behind KKR REAL ESTFINTR and ELLINGTON RESIDMTG SBI 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.