Correlation Between KKR Co and Verizon Communications
Can any of the company-specific risk be diversified away by investing in both KKR Co and Verizon Communications 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 Verizon Communications 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 Verizon Communications, you can compare the effects of market volatilities on KKR Co and Verizon Communications 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 Verizon Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of KKR Co and Verizon Communications.
Diversification Opportunities for KKR Co and Verizon Communications
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between KKR and Verizon is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding KKR Co LP and Verizon Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verizon Communications 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 Verizon Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Verizon Communications has no effect on the direction of KKR Co i.e., KKR Co and Verizon Communications go up and down completely randomly.
Pair Corralation between KKR Co and Verizon Communications
Considering the 90-day investment horizon KKR Co LP is expected to under-perform the Verizon Communications. In addition to that, KKR Co is 2.43 times more volatile than Verizon Communications. It trades about -0.45 of its total potential returns per unit of risk. Verizon Communications is currently generating about 0.33 per unit of volatility. If you would invest 4,040 in Verizon Communications on November 29, 2024 and sell it today you would earn a total of 278.00 from holding Verizon Communications or generate 6.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KKR Co LP vs. Verizon Communications
Performance |
| Timeline |
| KKR Co LP |
| Verizon Communications |
KKR Co and Verizon Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KKR Co and Verizon Communications
The main advantage of trading using opposite KKR Co and Verizon Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KKR Co position performs unexpectedly, Verizon Communications 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 Verizon Communications will offset losses from the drop in Verizon Communications' long position.| KKR Co vs. Carlyle Group | KKR Co vs. Ares Management LP | KKR Co vs. Blackstone Group | KKR Co vs. Blue Owl Capital |
| Verizon Communications vs. T Mobile | Verizon Communications vs. Lumen Technologies | Verizon Communications vs. Comcast Corp | Verizon Communications vs. ATT Inc |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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