Correlation Between KKR Co and Royce Value

Can any of the company-specific risk be diversified away by investing in both KKR Co and Royce Value 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 Royce Value 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 Royce Value Closed, you can compare the effects of market volatilities on KKR Co and Royce Value 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 Royce Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of KKR Co and Royce Value.

Diversification Opportunities for KKR Co and Royce Value

0.59

Correlation Coefficient

KKR Co  Royce Value

Very weak diversification

The 3 months correlation between KKR and Royce is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding KKR Co LP and Royce Value Closed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royce Value Closed 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 Royce Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royce Value Closed has no effect on the direction of KKR Co i.e., KKR Co and Royce Value go up and down completely randomly.

Pair Corralation between KKR Co and Royce Value

Considering the 90-day investment horizon KKR Co LP is expected to under-perform the Royce Value. In addition to that, KKR Co is 2.94 times more volatile than Royce Value Closed. It trades about -0.34 of its total potential returns per unit of risk. Royce Value Closed is currently generating about -0.31 per unit of volatility. If you would invest  1,629  in Royce Value Closed on November 28, 2024 and sell it today you would lose (93.00) from holding Royce Value Closed or give up 5.71% of portfolio value over 90 days.

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

KKR Co LP  vs.  Royce Value Closed

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 March 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Royce Value Closed

Risk-Adjusted Performance

Very Weak

Over the last 90 days Royce Value Closed has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Royce Value is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with KKR Co and Royce Value

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

The idea behind KKR Co LP and Royce Value Closed 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.