Correlation Between Carlyle Secured and KKR Co

Can any of the company-specific risk be diversified away by investing in both Carlyle Secured 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 Carlyle Secured and KKR Co into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Carlyle Secured Lending and KKR Co LP, you can compare the effects of market volatilities on Carlyle Secured 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 Carlyle Secured with a short position of KKR Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carlyle Secured and KKR Co.

Diversification Opportunities for Carlyle Secured and KKR Co

0.92

Correlation Coefficient

Carlyle Secured  KKR Co

Almost no diversification

The 3 months correlation between Carlyle and KKR is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Carlyle Secured Lending 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 Carlyle Secured 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 Carlyle Secured Lending 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 Carlyle Secured i.e., Carlyle Secured and KKR Co go up and down completely randomly.

Pair Corralation between Carlyle Secured and KKR Co

Given the investment horizon of 90 days Carlyle Secured Lending is expected to generate 0.42 times more return on investment than KKR Co. However, Carlyle Secured Lending is 2.38 times less risky than KKR Co. It trades about -0.06 of its potential returns per unit of risk. KKR Co LP is currently generating about -0.12 per unit of risk. If you would invest  1,773  in Carlyle Secured Lending on December 28, 2024 and sell it today you would lose (82.00) from holding Carlyle Secured Lending or give up 4.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Carlyle Secured Lending  vs.  KKR Co LP

Carlyle Secured Lending

Risk-Adjusted Performance

Very Weak

Over the last 90 days Carlyle Secured Lending has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, Carlyle Secured is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

KKR Co LP

Risk-Adjusted Performance

Very Weak

Over the last 90 days KKR Co LP has generated negative risk-adjusted returns adding no value to investors with long positions. Even with fragile performance in the last few months, the Stock's forward-looking signals remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Carlyle Secured and KKR Co

The main advantage of trading using opposite Carlyle Secured and KKR Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carlyle Secured 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 Carlyle Secured Lending 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.

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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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.