Correlation Between Moelis and TPG
Can any of the company-specific risk be diversified away by investing in both Moelis and TPG 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 Moelis and TPG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Moelis Co and TPG Inc, you can compare the effects of market volatilities on Moelis and TPG 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 Moelis with a short position of TPG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Moelis and TPG.
Diversification Opportunities for Moelis and TPG
Poor diversification
The 3 months correlation between Moelis and TPG is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Moelis Co and TPG Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TPG Inc and Moelis 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 Moelis Co are associated (or correlated) with TPG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TPG Inc has no effect on the direction of Moelis i.e., Moelis and TPG go up and down completely randomly.
Pair Corralation between Moelis and TPG
Allowing for the 90-day total investment horizon Moelis is expected to generate 1.49 times less return on investment than TPG. In addition to that, Moelis is 1.1 times more volatile than TPG Inc. It trades about 0.12 of its total potential returns per unit of risk. TPG Inc is currently generating about 0.2 per unit of volatility. If you would invest 4,112 in TPG Inc on August 27, 2024 and sell it today you would earn a total of 3,017 from holding TPG Inc or generate 73.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Moelis Co vs. TPG Inc
Performance |
| Timeline |
| Moelis |
| TPG Inc |
Moelis and TPG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Moelis and TPG
The main advantage of trading using opposite Moelis and TPG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Moelis position performs unexpectedly, TPG 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 TPG will offset losses from the drop in TPG's long position.The idea behind Moelis Co and TPG Inc 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.| TPG vs. Ares Management LP | TPG vs. Patria Investments | TPG vs. Apollo Global Management | TPG vs. Cion Investment Corp |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
Other Complementary Tools
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio |