Correlation Between KKR Real and AGNC Investment

Can any of the company-specific risk be diversified away by investing in both KKR Real and AGNC Investment 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 AGNC Investment 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 AGNC Investment Corp, you can compare the effects of market volatilities on KKR Real and AGNC Investment 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 AGNC Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of KKR Real and AGNC Investment.

Diversification Opportunities for KKR Real and AGNC Investment

-0.26

Correlation Coefficient

KKR Real  AGNC Investment

Very good diversification

The 3 months correlation between KKR and AGNC is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding KKR Real Estate and AGNC Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGNC Investment Corp 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 AGNC Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGNC Investment Corp has no effect on the direction of KKR Real i.e., KKR Real and AGNC Investment go up and down completely randomly.

Pair Corralation between KKR Real and AGNC Investment

Given the investment horizon of 90 days KKR Real is expected to generate 1.07 times less return on investment than AGNC Investment. In addition to that, KKR Real is 3.88 times more volatile than AGNC Investment Corp. It trades about 0.04 of its total potential returns per unit of risk. AGNC Investment Corp is currently generating about 0.15 per unit of volatility. If you would invest  2,462  in AGNC Investment Corp on September 1, 2024 and sell it today you would earn a total of  84.00  from holding AGNC Investment Corp or generate 3.41% 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.  AGNC Investment Corp

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.

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 current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with KKR Real and AGNC Investment

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

The idea behind KKR Real Estate and AGNC Investment Corp 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.