Correlation Between Kennedy Wilson and IRSA Inversiones

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

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

Diversification Opportunities for Kennedy Wilson and IRSA Inversiones

0.85

Correlation Coefficient

Kennedy Wilson  IRSA Inversiones

Very poor diversification

The 3 months correlation between Kennedy and IRSA is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Kennedy Wilson Holdings and IRSA Inversiones Y in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IRSA Inversiones Y and Kennedy Wilson 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 Kennedy Wilson Holdings are associated (or correlated) with IRSA Inversiones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IRSA Inversiones Y has no effect on the direction of Kennedy Wilson i.e., Kennedy Wilson and IRSA Inversiones go up and down completely randomly.

Pair Corralation between Kennedy Wilson and IRSA Inversiones

Allowing for the 90-day total investment horizon Kennedy Wilson is expected to generate 1.26 times less return on investment than IRSA Inversiones. But when comparing it to its historical volatility, Kennedy Wilson Holdings is 1.23 times less risky than IRSA Inversiones. It trades about 0.13 of its potential returns per unit of risk. IRSA Inversiones Y is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  793.00  in IRSA Inversiones Y on March 16, 2024 and sell it today you would earn a total of  209.00  from holding IRSA Inversiones Y or generate 26.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Kennedy Wilson Holdings  vs.  IRSA Inversiones Y

Kennedy Wilson Holdings

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kennedy Wilson Holdings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Kennedy Wilson showed solid returns over the last few months and may actually be approaching a breakup point.

IRSA Inversiones Y

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in IRSA Inversiones Y are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, IRSA Inversiones unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kennedy Wilson and IRSA Inversiones

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

The idea behind Kennedy Wilson Holdings and IRSA Inversiones Y 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.