Correlation Between Cherry Hill and KKR Real

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

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

Diversification Opportunities for Cherry Hill and KKR Real

0.94

Correlation Coefficient

Cherry Hill  KKR Real

Almost no diversification

The 3 months correlation between Cherry and KKR is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Cherry Hill Mortgage 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 Cherry Hill 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 Cherry Hill Mortgage 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 Cherry Hill i.e., Cherry Hill and KKR Real go up and down completely randomly.

Pair Corralation between Cherry Hill and KKR Real

Given the investment horizon of 90 days Cherry Hill Mortgage is expected to under-perform the KKR Real. In addition to that, Cherry Hill is 1.19 times more volatile than KKR Real Estate. It trades about -0.03 of its total potential returns per unit of risk. KKR Real Estate is currently generating about -0.03 per unit of volatility. If you would invest  985.00  in KKR Real Estate on January 24, 2025 and sell it today you would lose (57.00) from holding KKR Real Estate or give up 5.79% of portfolio value over 90 days.

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

Cherry Hill Mortgage  vs.  KKR Real Estate

Cherry Hill Mortgage

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cherry Hill Mortgage has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong primary indicators, Cherry Hill is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

KKR Real Estate

Risk-Adjusted Performance

Very Weak

Over the last 90 days KKR Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, KKR Real is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Cherry Hill and KKR Real

The main advantage of trading using opposite Cherry Hill and KKR Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cherry Hill 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 Cherry Hill Mortgage 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.