Correlation Between Kkr Income and Ares Dynamic

Can any of the company-specific risk be diversified away by investing in both Kkr Income and Ares Dynamic 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 Income and Ares Dynamic into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kkr Income Opportunities and Ares Dynamic Credit, you can compare the effects of market volatilities on Kkr Income and Ares Dynamic 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 Income with a short position of Ares Dynamic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kkr Income and Ares Dynamic.

Diversification Opportunities for Kkr Income and Ares Dynamic

0.52

Correlation Coefficient

Kkr Income  Ares Dynamic

Very weak diversification

The 3 months correlation between Kkr and Ares is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Kkr Income Opportunities and Ares Dynamic Credit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ares Dynamic Credit and Kkr Income 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 Income Opportunities are associated (or correlated) with Ares Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ares Dynamic Credit has no effect on the direction of Kkr Income i.e., Kkr Income and Ares Dynamic go up and down completely randomly.

Pair Corralation between Kkr Income and Ares Dynamic

Considering the 90-day investment horizon Kkr Income Opportunities is expected to generate 0.75 times more return on investment than Ares Dynamic. However, Kkr Income Opportunities is 1.33 times less risky than Ares Dynamic. It trades about -0.09 of its potential returns per unit of risk. Ares Dynamic Credit is currently generating about -0.08 per unit of risk. If you would invest  1,277  in Kkr Income Opportunities on December 26, 2024 and sell it today you would lose (41.00) from holding Kkr Income Opportunities or give up 3.21% of portfolio value over 90 days.

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

Kkr Income Opportunities  vs.  Ares Dynamic Credit

Kkr Income Opportunities

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kkr Income Opportunities has generated negative risk-adjusted returns adding no value to fund investors. In spite of very healthy forward indicators, Kkr Income is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Ares Dynamic Credit

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ares Dynamic Credit has generated negative risk-adjusted returns adding no value to fund investors. In spite of rather sound fundamental indicators, Ares Dynamic is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Kkr Income and Ares Dynamic

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

The idea behind Kkr Income Opportunities and Ares Dynamic Credit 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.