Correlation Between Ellington Financial and Kennedy Wilson
Can any of the company-specific risk be diversified away by investing in both Ellington Financial 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 Ellington Financial and Kennedy Wilson into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ellington Financial LLC and Kennedy Wilson Holdings, you can compare the effects of market volatilities on Ellington Financial 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 Ellington Financial with a short position of Kennedy Wilson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ellington Financial and Kennedy Wilson.
Diversification Opportunities for Ellington Financial and Kennedy Wilson
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ellington and Kennedy is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Ellington Financial LLC 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 Ellington Financial 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 Ellington Financial LLC 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 Ellington Financial i.e., Ellington Financial and Kennedy Wilson go up and down completely randomly.
Pair Corralation between Ellington Financial and Kennedy Wilson
Considering the 90-day investment horizon Ellington Financial is expected to generate 8.98 times less return on investment than Kennedy Wilson. But when comparing it to its historical volatility, Ellington Financial LLC is 1.77 times less risky than Kennedy Wilson. It trades about 0.03 of its potential returns per unit of risk. Kennedy Wilson Holdings is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 781.00 in Kennedy Wilson Holdings on January 26, 2024 and sell it today you would earn a total of 68.00 from holding Kennedy Wilson Holdings or generate 8.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ellington Financial LLC vs. Kennedy Wilson Holdings
Performance |
| Timeline |
| Ellington Financial LLC |
| Kennedy Wilson Holdings |
Ellington Financial and Kennedy Wilson Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ellington Financial and Kennedy Wilson
The main advantage of trading using opposite Ellington Financial and Kennedy Wilson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ellington Financial 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.| Ellington Financial vs. Ellington Residential Mortgage | Ellington Financial vs. Dynex Capital | Ellington Financial vs. Orchid Island Capital | Ellington Financial vs. Chimera Investment |
| Kennedy Wilson vs. Frp Holdings Ord | Kennedy Wilson vs. Transcontinental Realty Investors | Kennedy Wilson vs. Anywhere Real Estate | Kennedy Wilson vs. Re Max Holding |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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