Correlation Between Kkr Credit and Wesfarmers

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

Diversification Opportunities for Kkr Credit and Wesfarmers

0.08

Correlation Coefficient

Kkr Credit  Wesfarmers

Significant diversification

The 3 months correlation between Kkr and Wesfarmers is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Kkr Credit Income and Wesfarmers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wesfarmers 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 Wesfarmers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wesfarmers has no effect on the direction of Kkr Credit i.e., Kkr Credit and Wesfarmers go up and down completely randomly.

Pair Corralation between Kkr Credit and Wesfarmers

Assuming the 90 days trading horizon Kkr Credit Income is expected to under-perform the Wesfarmers. But the stock apears to be less risky and, when comparing its historical volatility, Kkr Credit Income is 1.5 times less risky than Wesfarmers. The stock trades about -0.1 of its potential returns per unit of risk. The Wesfarmers is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  7,157  in Wesfarmers on October 25, 2024 and sell it today you would earn a total of  75.00  from holding Wesfarmers or generate 1.05% return on investment over 90 days.

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

Kkr Credit Income  vs.  Wesfarmers

Kkr Credit Income

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kkr Credit Income are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

Wesfarmers

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Wesfarmers are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Wesfarmers may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Kkr Credit and Wesfarmers

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

The idea behind Kkr Credit Income and Wesfarmers 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.