Correlation Between Claros Mortgage and KKR Real

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

By analyzing existing cross correlation between Claros Mortgage Trust and KKR Real Estate, you can compare the effects of market volatilities on Claros Mortgage and KKR Real 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 Claros Mortgage with a short position of KKR Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Claros Mortgage and KKR Real.

Diversification Opportunities for Claros Mortgage and KKR Real

0.55

Correlation Coefficient

Claros Mortgage  KKR Real

Very weak diversification

The 3 months correlation between Claros and KKR is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Claros Mortgage Trust and KKR Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KKR Real Estate and Claros Mortgage 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 Claros Mortgage Trust are associated (or correlated) with KKR Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KKR Real Estate has no effect on the direction of Claros Mortgage i.e., Claros Mortgage and KKR Real go up and down completely randomly.

Pair Corralation between Claros Mortgage and KKR Real

Given the investment horizon of 90 days Claros Mortgage Trust is expected to under-perform the KKR Real. In addition to that, Claros Mortgage is 2.31 times more volatile than KKR Real Estate. It trades about -0.05 of its total potential returns per unit of risk. KKR Real Estate is currently generating about 0.04 per unit of volatility. If you would invest  1,133  in KKR Real Estate on September 3, 2024 and sell it today you would earn a total of  30.00  from holding KKR Real Estate or generate 2.65% return on investment over 90 days.

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

Claros Mortgage Trust  vs.  KKR Real Estate

Claros Mortgage Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Claros Mortgage Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

KKR Real Estate

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in KKR Real Estate are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, KKR Real is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Claros Mortgage and KKR Real

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

The idea behind Claros Mortgage Trust and KKR Real Estate 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.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.