Correlation Between KKR Co and Virtu Financial
Can any of the company-specific risk be diversified away by investing in both KKR Co and Virtu Financial 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 Virtu Financial 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 Virtu Financial, you can compare the effects of market volatilities on KKR Co and Virtu Financial 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 Virtu Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of KKR Co and Virtu Financial.
Diversification Opportunities for KKR Co and Virtu Financial
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between KKR and Virtu is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding KKR Co LP and Virtu Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtu Financial 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 Virtu Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtu Financial has no effect on the direction of KKR Co i.e., KKR Co and Virtu Financial go up and down completely randomly.
Pair Corralation between KKR Co and Virtu Financial
Assuming the 90 days trading horizon KKR Co LP is expected to under-perform the Virtu Financial. But the stock apears to be less risky and, when comparing its historical volatility, KKR Co LP is 1.0 times less risky than Virtu Financial. The stock trades about -0.46 of its potential returns per unit of risk. The Virtu Financial is currently generating about -0.18 of returns per unit of risk over similar time horizon. If you would invest 3,720 in Virtu Financial on November 28, 2024 and sell it today you would lose (340.00) from holding Virtu Financial or give up 9.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
KKR Co LP vs. Virtu Financial
Performance |
| Timeline |
| KKR Co LP |
| Virtu Financial |
KKR Co and Virtu Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KKR Co and Virtu Financial
The main advantage of trading using opposite KKR Co and Virtu Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KKR Co position performs unexpectedly, Virtu Financial 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 Virtu Financial will offset losses from the drop in Virtu Financial's long position.| KKR Co vs. Sunny Optical Technology | KKR Co vs. Cognizant Technology Solutions | KKR Co vs. Platinum Investment Management | KKR Co vs. X FAB Silicon Foundries |
| Virtu Financial vs. Vulcan Materials | Virtu Financial vs. Mitsubishi Materials | Virtu Financial vs. Air Lease | Virtu Financial vs. ALBIS LEASING AG |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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