Correlation Between Carlyle Secured and TPG

Can any of the company-specific risk be diversified away by investing in both Carlyle Secured 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 Carlyle Secured and TPG 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 TPG Inc, you can compare the effects of market volatilities on Carlyle Secured 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 Carlyle Secured with a short position of TPG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carlyle Secured and TPG.

Diversification Opportunities for Carlyle Secured and TPG

0.9

Correlation Coefficient

Carlyle Secured  TPG

Almost no diversification

The 3 months correlation between Carlyle and TPG is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Carlyle Secured Lending and TPG Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TPG Inc 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 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 Carlyle Secured i.e., Carlyle Secured and TPG go up and down completely randomly.

Pair Corralation between Carlyle Secured and TPG

Given the investment horizon of 90 days Carlyle Secured Lending is expected to generate 0.49 times more return on investment than TPG. However, Carlyle Secured Lending is 2.05 times less risky than TPG. It trades about -0.06 of its potential returns per unit of risk. TPG Inc is currently generating about -0.14 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.  TPG Inc

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.

TPG Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days TPG Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Carlyle Secured and TPG

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

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.