Correlation Between KKR REAL and Dynex Capital

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

Diversification Opportunities for KKR REAL and Dynex Capital

-0.27

Correlation Coefficient

KKR REAL  Dynex Capital

Very good diversification

The 3 months correlation between KKR and Dynex is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding KKR REAL ESTFINTR and Dynex Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynex Capital 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 Dynex Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dynex Capital has no effect on the direction of KKR REAL i.e., KKR REAL and Dynex Capital go up and down completely randomly.

Pair Corralation between KKR REAL and Dynex Capital

Assuming the 90 days horizon KKR REAL ESTFINTR is expected to under-perform the Dynex Capital. In addition to that, KKR REAL is 1.89 times more volatile than Dynex Capital. It trades about -0.18 of its total potential returns per unit of risk. Dynex Capital is currently generating about 0.08 per unit of volatility. If you would invest  1,191  in Dynex Capital on October 11, 2024 and sell it today you would earn a total of  17.00  from holding Dynex Capital or generate 1.43% return on investment over 90 days.

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

KKR REAL ESTFINTR  vs.  Dynex Capital

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 current stock price disturbance, may contribute to mid-run losses for the stockholders.

Dynex Capital

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dynex Capital are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Dynex Capital reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KKR REAL and Dynex Capital

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

The idea behind KKR REAL ESTFINTR and Dynex Capital 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.