Correlation Between CareTrust REIT and Kennedy Wilson

Can any of the company-specific risk be diversified away by investing in both CareTrust REIT and Kennedy Wilson 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 CareTrust REIT and Kennedy Wilson into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CareTrust REIT and Kennedy Wilson Holdings, you can compare the effects of market volatilities on CareTrust REIT and Kennedy Wilson 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 CareTrust REIT with a short position of Kennedy Wilson. Check out your portfolio center. Please also check ongoing floating volatility patterns of CareTrust REIT and Kennedy Wilson.

Diversification Opportunities for CareTrust REIT and Kennedy Wilson

0.21

Correlation Coefficient

CareTrust REIT  Kennedy Wilson

Modest diversification

The 3 months correlation between CareTrust and Kennedy is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding CareTrust REIT and Kennedy Wilson Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kennedy Wilson Holdings and CareTrust REIT 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 CareTrust REIT are associated (or correlated) with Kennedy Wilson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kennedy Wilson Holdings has no effect on the direction of CareTrust REIT i.e., CareTrust REIT and Kennedy Wilson go up and down completely randomly.

Pair Corralation between CareTrust REIT and Kennedy Wilson

Given the investment horizon of 90 days CareTrust REIT is expected to under-perform the Kennedy Wilson. But the stock apears to be less risky and, when comparing its historical volatility, CareTrust REIT is 1.37 times less risky than Kennedy Wilson. The stock trades about -0.12 of its potential returns per unit of risk. The Kennedy Wilson Holdings is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  1,084  in Kennedy Wilson Holdings on September 23, 2024 and sell it today you would lose (79.00) from holding Kennedy Wilson Holdings or give up 7.29% of portfolio value over 90 days.

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

CareTrust REIT  vs.  Kennedy Wilson Holdings

CareTrust REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CareTrust REIT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Kennedy Wilson Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kennedy Wilson Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Kennedy Wilson is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with CareTrust REIT and Kennedy Wilson

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

The idea behind CareTrust REIT and Kennedy Wilson Holdings 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.