Correlation Between KKR Real and Two Harbors
Can any of the company-specific risk be diversified away by investing in both KKR Real and Two Harbors 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 Two Harbors 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 Two Harbors Investments, you can compare the effects of market volatilities on KKR Real and Two Harbors 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 Two Harbors. Check out your portfolio center. Please also check ongoing floating volatility patterns of KKR Real and Two Harbors.
Diversification Opportunities for KKR Real and Two Harbors
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between KKR and Two is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding KKR Real Estate and Two Harbors Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Two Harbors Investments 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 Two Harbors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Two Harbors Investments has no effect on the direction of KKR Real i.e., KKR Real and Two Harbors go up and down completely randomly.
Pair Corralation between KKR Real and Two Harbors
Given the investment horizon of 90 days KKR Real Estate is expected to generate 0.69 times more return on investment than Two Harbors. However, KKR Real Estate is 1.45 times less risky than Two Harbors. It trades about -0.06 of its potential returns per unit of risk. Two Harbors Investments is currently generating about -0.26 per unit of risk. If you would invest 1,180 in KKR Real Estate on August 24, 2024 and sell it today you would lose (22.00) from holding KKR Real Estate or give up 1.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KKR Real Estate vs. Two Harbors Investments
Performance |
| Timeline |
| KKR Real Estate |
| Two Harbors Investments |
KKR Real and Two Harbors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KKR Real and Two Harbors
The main advantage of trading using opposite KKR Real and Two Harbors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KKR Real position performs unexpectedly, Two Harbors 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 Two Harbors will offset losses from the drop in Two Harbors' long position.| KKR Real vs. Ellington Financial | KKR Real vs. Dynex Capital | KKR Real vs. Ares Commercial Real | KKR Real vs. Cherry Hill Mortgage |
| Two Harbors vs. New York Mortgage | Two Harbors vs. ARMOUR Residential REIT | Two Harbors vs. Annaly Capital Management | Two Harbors vs. AGNC Investment Corp |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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