Correlation Between TPG and KKR Co
Can any of the company-specific risk be diversified away by investing in both TPG 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 TPG and KKR Co into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TPG Inc and KKR Co LP, you can compare the effects of market volatilities on TPG 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 TPG with a short position of KKR Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of TPG and KKR Co.
Diversification Opportunities for TPG and KKR Co
Almost no diversification
The 3 months correlation between TPG and KKR is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding TPG Inc 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 TPG 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 TPG Inc 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 TPG i.e., TPG and KKR Co go up and down completely randomly.
Pair Corralation between TPG and KKR Co
Considering the 90-day investment horizon TPG Inc is expected to generate 1.3 times more return on investment than KKR Co. However, TPG is 1.3 times more volatile than KKR Co LP. It trades about 0.23 of its potential returns per unit of risk. KKR Co LP is currently generating about 0.22 per unit of risk. If you would invest 4,992 in TPG Inc on August 23, 2024 and sell it today you would earn a total of 1,978 from holding TPG Inc or generate 39.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
TPG Inc vs. KKR Co LP
Performance |
| Timeline |
| TPG Inc |
| KKR Co LP |
TPG and KKR Co Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TPG and KKR Co
The main advantage of trading using opposite TPG and KKR Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TPG 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.| TPG vs. Ares Management LP | TPG vs. Patria Investments | TPG vs. Apollo Global Management | TPG vs. Cion Investment Corp |
| KKR Co vs. Carlyle Group | KKR Co vs. Ares Management LP | KKR Co vs. Blackstone Group | KKR Co vs. Blue Owl Capital |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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