Correlation Between KKR Real and Invesco Mortgage
Can any of the company-specific risk be diversified away by investing in both KKR Real and Invesco Mortgage 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 Real and Invesco Mortgage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KKR Real Estate and Invesco Mortgage Capital, you can compare the effects of market volatilities on KKR Real and Invesco Mortgage 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 Real with a short position of Invesco Mortgage. Check out your portfolio center. Please also check ongoing floating volatility patterns of KKR Real and Invesco Mortgage.
Diversification Opportunities for KKR Real and Invesco Mortgage
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between KKR and Invesco is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding KKR Real Estate and Invesco Mortgage Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Mortgage Capital and KKR Real 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 Real Estate are associated (or correlated) with Invesco Mortgage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Mortgage Capital has no effect on the direction of KKR Real i.e., KKR Real and Invesco Mortgage go up and down completely randomly.
Pair Corralation between KKR Real and Invesco Mortgage
Given the investment horizon of 90 days KKR Real Estate is expected to under-perform the Invesco Mortgage. In addition to that, KKR Real is 2.22 times more volatile than Invesco Mortgage Capital. It trades about -0.06 of its total potential returns per unit of risk. Invesco Mortgage Capital is currently generating about 0.2 per unit of volatility. If you would invest 2,470 in Invesco Mortgage Capital on August 24, 2024 and sell it today you would earn a total of 61.00 from holding Invesco Mortgage Capital or generate 2.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KKR Real Estate vs. Invesco Mortgage Capital
Performance |
| Timeline |
| KKR Real Estate |
| Invesco Mortgage Capital |
KKR Real and Invesco Mortgage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KKR Real and Invesco Mortgage
The main advantage of trading using opposite KKR Real and Invesco Mortgage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KKR Real position performs unexpectedly, Invesco Mortgage 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 Invesco Mortgage will offset losses from the drop in Invesco Mortgage's long position.| KKR Real vs. Ellington Financial | KKR Real vs. Dynex Capital | KKR Real vs. Ares Commercial Real | KKR Real vs. Cherry Hill Mortgage |
| Invesco Mortgage vs. New York Mortgage | Invesco Mortgage vs. New York Mortgage | Invesco Mortgage vs. Two Harbors Investment | Invesco Mortgage vs. Two Harbors 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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