Correlation Between Royalty Management and TPG
Can any of the company-specific risk be diversified away by investing in both Royalty Management 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 Royalty Management and TPG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Royalty Management Holding and TPG Inc, you can compare the effects of market volatilities on Royalty Management 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 Royalty Management with a short position of TPG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royalty Management and TPG.
Diversification Opportunities for Royalty Management and TPG
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Royalty and TPG is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Royalty Management Holding and TPG Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TPG Inc and Royalty Management 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 Royalty Management Holding 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 Royalty Management i.e., Royalty Management and TPG go up and down completely randomly.
Pair Corralation between Royalty Management and TPG
Given the investment horizon of 90 days Royalty Management Holding is expected to generate 1.24 times more return on investment than TPG. However, Royalty Management is 1.24 times more volatile than TPG Inc. It trades about 0.06 of its potential returns per unit of risk. TPG Inc is currently generating about 0.07 per unit of risk. If you would invest 98.00 in Royalty Management Holding on August 27, 2024 and sell it today you would earn a total of 4.00 from holding Royalty Management Holding or generate 4.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Royalty Management Holding vs. TPG Inc
Performance |
| Timeline |
| Royalty Management |
| TPG Inc |
Royalty Management and TPG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Royalty Management and TPG
The main advantage of trading using opposite Royalty Management and TPG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Royalty Management 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.| Royalty Management vs. Kura Sushi USA | Royalty Management vs. Aldel Financial II | Royalty Management vs. Kite Realty Group | Royalty Management vs. Alvarium Tiedemann Holdings |
| 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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