Correlation Between KKR Co and MSCI

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

Diversification Opportunities for KKR Co and MSCI

0.78

Correlation Coefficient

KKR Co  MSCI

Poor diversification

The 3 months correlation between KKR and MSCI is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding KKR Co LP and MSCI Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MSCI Inc 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 MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MSCI Inc has no effect on the direction of KKR Co i.e., KKR Co and MSCI go up and down completely randomly.

Pair Corralation between KKR Co and MSCI

Assuming the 90 days trading horizon KKR Co LP is expected to under-perform the MSCI. In addition to that, KKR Co is 1.18 times more volatile than MSCI Inc. It trades about -0.19 of its total potential returns per unit of risk. MSCI Inc is currently generating about 0.07 per unit of volatility. If you would invest  56,400  in MSCI Inc on September 24, 2024 and sell it today you would earn a total of  1,000.00  from holding MSCI Inc or generate 1.77% return on investment over 90 days.

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

KKR Co LP  vs.  MSCI Inc

KKR Co LP

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in KKR Co LP are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, KKR Co reported solid returns over the last few months and may actually be approaching a breakup point.

MSCI Inc

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MSCI Inc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, MSCI reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KKR Co and MSCI

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

The idea behind KKR Co LP and MSCI 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.

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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.