Correlation Between KKR Co and Nuveen California

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

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

Diversification Opportunities for KKR Co and Nuveen California

-0.19

Correlation Coefficient

KKR Co  Nuveen California

Good diversification

The 3 months correlation between KKR and Nuveen is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding KKR Co LP and Nuveen California Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen California Select and KKR Co 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 KKR Co LP are associated (or correlated) with Nuveen California. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen California Select has no effect on the direction of KKR Co i.e., KKR Co and Nuveen California go up and down completely randomly.

Pair Corralation between KKR Co and Nuveen California

Considering the 90-day investment horizon KKR Co LP is expected to under-perform the Nuveen California. In addition to that, KKR Co is 6.42 times more volatile than Nuveen California Select. It trades about -0.11 of its total potential returns per unit of risk. Nuveen California Select is currently generating about 0.06 per unit of volatility. If you would invest  1,300  in Nuveen California Select on December 27, 2024 and sell it today you would earn a total of  19.00  from holding Nuveen California Select or generate 1.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

KKR Co LP  vs.  Nuveen California Select

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.

Nuveen California Select

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen California Select are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Nuveen California is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with KKR Co and Nuveen California

The main advantage of trading using opposite KKR Co and Nuveen California positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KKR Co position performs unexpectedly, Nuveen California 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 Nuveen California will offset losses from the drop in Nuveen California's long position.

The idea behind KKR Co LP and Nuveen California Select 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.