Correlation Between KKR Co and Ecovyst
Can any of the company-specific risk be diversified away by investing in both KKR Co and Ecovyst 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 Co and Ecovyst into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KKR Co LP and Ecovyst, you can compare the effects of market volatilities on KKR Co and Ecovyst 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 Co with a short position of Ecovyst. Check out your portfolio center. Please also check ongoing floating volatility patterns of KKR Co and Ecovyst.
Diversification Opportunities for KKR Co and Ecovyst
Poor diversification
The 3 months correlation between KKR and Ecovyst is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding KKR Co LP and Ecovyst in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecovyst and KKR Co 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 Co LP are associated (or correlated) with Ecovyst. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecovyst has no effect on the direction of KKR Co i.e., KKR Co and Ecovyst go up and down completely randomly.
Pair Corralation between KKR Co and Ecovyst
Considering the 90-day investment horizon KKR Co is expected to generate 1.11 times less return on investment than Ecovyst. But when comparing it to its historical volatility, KKR Co LP is 1.49 times less risky than Ecovyst. It trades about 0.34 of its potential returns per unit of risk. Ecovyst is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 666.00 in Ecovyst on September 1, 2024 and sell it today you would earn a total of 129.00 from holding Ecovyst or generate 19.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KKR Co LP vs. Ecovyst
Performance |
| Timeline |
| KKR Co LP |
| Ecovyst |
KKR Co and Ecovyst Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KKR Co and Ecovyst
The main advantage of trading using opposite KKR Co and Ecovyst positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KKR Co position performs unexpectedly, Ecovyst 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 Ecovyst will offset losses from the drop in Ecovyst's long position.| KKR Co vs. Carlyle Group | KKR Co vs. Ares Management LP | KKR Co vs. Blackstone Group | KKR Co vs. Blue Owl Capital |
| Ecovyst vs. Orion Engineered Carbons | Ecovyst vs. Cabot | Ecovyst vs. Minerals Technologies | Ecovyst vs. Quaker Chemical |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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