Correlation Between Ares Capital and KKR Co
Can any of the company-specific risk be diversified away by investing in both Ares Capital and KKR Co 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 Ares Capital and KKR Co into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ares Capital and KKR Co LP, you can compare the effects of market volatilities on Ares Capital and KKR Co 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 Ares Capital with a short position of KKR Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ares Capital and KKR Co.
Diversification Opportunities for Ares Capital and KKR Co
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ares and KKR is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Ares Capital and KKR Co LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KKR Co LP and Ares Capital 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 Ares Capital are associated (or correlated) with KKR Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KKR Co LP has no effect on the direction of Ares Capital i.e., Ares Capital and KKR Co go up and down completely randomly.
Pair Corralation between Ares Capital and KKR Co
Given the investment horizon of 90 days Ares Capital is expected to generate 10.22 times less return on investment than KKR Co. But when comparing it to its historical volatility, Ares Capital is 3.66 times less risky than KKR Co. It trades about 0.09 of its potential returns per unit of risk. KKR Co LP is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 13,837 in KKR Co LP on August 24, 2024 and sell it today you would earn a total of 1,930 from holding KKR Co LP or generate 13.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ares Capital vs. KKR Co LP
Performance |
| Timeline |
| Ares Capital |
| KKR Co LP |
Ares Capital and KKR Co Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ares Capital and KKR Co
The main advantage of trading using opposite Ares Capital and KKR Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ares Capital position performs unexpectedly, KKR Co 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 Co will offset losses from the drop in KKR Co's long position.| Ares Capital vs. Triplepoint Venture Growth | Ares Capital vs. Sixth Street Specialty | Ares Capital vs. Main Street Capital | Ares Capital vs. Capital Southwest |
| KKR Co vs. Carlyle Group | KKR Co vs. Ares Management LP | KKR Co vs. Blackstone Group | KKR Co vs. Blue Owl Capital |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
Other Complementary Tools
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios |