Correlation Between SP Global and KKR Co
Can any of the company-specific risk be diversified away by investing in both SP Global 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 SP Global and KKR Co into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SP Global and KKR Co LP, you can compare the effects of market volatilities on SP Global 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 SP Global with a short position of KKR Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of SP Global and KKR Co.
Diversification Opportunities for SP Global and KKR Co
Poor diversification
The 3 months correlation between MHL and KKR is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding SP Global 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 SP Global 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 SP Global 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 SP Global i.e., SP Global and KKR Co go up and down completely randomly.
Pair Corralation between SP Global and KKR Co
Assuming the 90 days horizon SP Global is expected to generate 0.77 times more return on investment than KKR Co. However, SP Global is 1.3 times less risky than KKR Co. It trades about -0.08 of its potential returns per unit of risk. KKR Co LP is currently generating about -0.18 per unit of risk. If you would invest 49,275 in SP Global on September 28, 2024 and sell it today you would lose (1,050) from holding SP Global or give up 2.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SP Global vs. KKR Co LP
Performance |
| Timeline |
| SP Global |
| KKR Co LP |
SP Global and KKR Co Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SP Global and KKR Co
The main advantage of trading using opposite SP Global and KKR Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SP Global 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.The idea behind SP Global and KKR Co LP 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.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 Anywhere module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Stocks Directory Find actively traded stocks across global markets | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data |