Correlation Between AGNC Investment and KKR Real

Can any of the company-specific risk be diversified away by investing in both AGNC Investment 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 AGNC Investment and KKR Real into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AGNC Investment Corp and KKR Real Estate, you can compare the effects of market volatilities on AGNC Investment 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 AGNC Investment with a short position of KKR Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of AGNC Investment and KKR Real.

Diversification Opportunities for AGNC Investment and KKR Real

-0.24

Correlation Coefficient

AGNC Investment  KKR Real

Very good diversification

The 3 months correlation between AGNC and KKR is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding AGNC Investment Corp 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 AGNC Investment 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 AGNC Investment Corp 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 AGNC Investment i.e., AGNC Investment and KKR Real go up and down completely randomly.

Pair Corralation between AGNC Investment and KKR Real

Assuming the 90 days horizon AGNC Investment is expected to generate 1.16 times less return on investment than KKR Real. But when comparing it to its historical volatility, AGNC Investment Corp is 5.08 times less risky than KKR Real. It trades about 0.16 of its potential returns per unit of risk. KKR Real Estate is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,133  in KKR Real Estate on September 1, 2024 and sell it today you would earn a total of  30.00  from holding KKR Real Estate or generate 2.65% return on investment over 90 days.

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

AGNC Investment Corp  vs.  KKR Real Estate

AGNC Investment Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AGNC Investment Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, AGNC Investment is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

KKR Real Estate

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in KKR Real Estate are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, KKR Real is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with AGNC Investment and KKR Real

The main advantage of trading using opposite AGNC Investment and KKR Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AGNC Investment 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.

The idea behind AGNC Investment Corp and KKR Real Estate 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.

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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.