Correlation Between Ellington Financial and KKR Real
Can any of the company-specific risk be diversified away by investing in both Ellington Financial 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 Ellington Financial and KKR Real into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ellington Financial and KKR Real Estate, you can compare the effects of market volatilities on Ellington Financial 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 Ellington Financial with a short position of KKR Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ellington Financial and KKR Real.
Diversification Opportunities for Ellington Financial and KKR Real
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ellington and KKR is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Ellington Financial 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 Ellington Financial 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 Ellington Financial 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 Ellington Financial i.e., Ellington Financial and KKR Real go up and down completely randomly.
Pair Corralation between Ellington Financial and KKR Real
Considering the 90-day investment horizon Ellington Financial is expected to generate 0.69 times more return on investment than KKR Real. However, Ellington Financial is 1.45 times less risky than KKR Real. It trades about 0.04 of its potential returns per unit of risk. KKR Real Estate is currently generating about 0.0 per unit of risk. If you would invest 1,014 in Ellington Financial on August 27, 2024 and sell it today you would earn a total of 238.00 from holding Ellington Financial or generate 23.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ellington Financial vs. KKR Real Estate
Performance |
| Timeline |
| Ellington Financial |
| KKR Real Estate |
Ellington Financial and KKR Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ellington Financial and KKR Real
The main advantage of trading using opposite Ellington Financial and KKR Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ellington Financial 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.| Ellington Financial vs. Ellington Residential Mortgage | Ellington Financial vs. Orchid Island Capital | Ellington Financial vs. ARMOUR Residential REIT | Ellington Financial vs. Dynex Capital |
| KKR Real vs. Ellington Financial | KKR Real vs. Dynex Capital | KKR Real vs. Ares Commercial Real | KKR Real vs. Cherry Hill Mortgage |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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