Correlation Between TKO Group and Avient Corp

Can any of the company-specific risk be diversified away by investing in both TKO Group and Avient Corp 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 TKO Group and Avient Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between TKO Group Holdings, and Avient Corp, you can compare the effects of market volatilities on TKO Group and Avient Corp 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 TKO Group with a short position of Avient Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of TKO Group and Avient Corp.

Diversification Opportunities for TKO Group and Avient Corp

-0.33

Correlation Coefficient

TKO Group  Avient Corp

Very good diversification

The 3 months correlation between TKO and Avient is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding TKO Group Holdings, and Avient Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avient Corp and TKO Group 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 TKO Group Holdings, are associated (or correlated) with Avient Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avient Corp has no effect on the direction of TKO Group i.e., TKO Group and Avient Corp go up and down completely randomly.

Pair Corralation between TKO Group and Avient Corp

Considering the 90-day investment horizon TKO Group Holdings, is expected to generate 1.13 times more return on investment than Avient Corp. However, TKO Group is 1.13 times more volatile than Avient Corp. It trades about 0.1 of its potential returns per unit of risk. Avient Corp is currently generating about -0.16 per unit of risk. If you would invest  13,495  in TKO Group Holdings, on December 2, 2024 and sell it today you would earn a total of  1,569  from holding TKO Group Holdings, or generate 11.63% return on investment over 90 days.

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

TKO Group Holdings,  vs.  Avient Corp

TKO Group Holdings,

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TKO Group Holdings, are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward-looking signals, TKO Group displayed solid returns over the last few months and may actually be approaching a breakup point.

Avient Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Avient Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with TKO Group and Avient Corp

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

The idea behind TKO Group Holdings, and Avient Corp 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.