Correlation Between Kkr Credit and Westpac Banking

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

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

Diversification Opportunities for Kkr Credit and Westpac Banking

-0.29

Correlation Coefficient

Kkr Credit  Westpac Banking

Very good diversification

The 3 months correlation between Kkr and Westpac is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Kkr Credit Income and Westpac Banking in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westpac Banking and Kkr Credit 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 Credit Income are associated (or correlated) with Westpac Banking. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westpac Banking has no effect on the direction of Kkr Credit i.e., Kkr Credit and Westpac Banking go up and down completely randomly.

Pair Corralation between Kkr Credit and Westpac Banking

Assuming the 90 days trading horizon Kkr Credit Income is expected to under-perform the Westpac Banking. In addition to that, Kkr Credit is 3.16 times more volatile than Westpac Banking. It trades about -0.11 of its total potential returns per unit of risk. Westpac Banking is currently generating about 0.03 per unit of volatility. If you would invest  10,277  in Westpac Banking on December 30, 2024 and sell it today you would earn a total of  38.00  from holding Westpac Banking or generate 0.37% return on investment over 90 days.

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

Kkr Credit Income  vs.  Westpac Banking

Kkr Credit Income

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kkr Credit Income has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Kkr Credit is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Westpac Banking

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Westpac Banking are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Westpac Banking is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Kkr Credit and Westpac Banking

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

The idea behind Kkr Credit Income and Westpac Banking 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.