Correlation Between TKO Group and 90331HPL1

Can any of the company-specific risk be diversified away by investing in both TKO Group and 90331HPL1 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 90331HPL1 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 US BANK NATIONAL, you can compare the effects of market volatilities on TKO Group and 90331HPL1 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 90331HPL1. Check out your portfolio center. Please also check ongoing floating volatility patterns of TKO Group and 90331HPL1.

Diversification Opportunities for TKO Group and 90331HPL1

-0.33

Correlation Coefficient

TKO Group  90331HPL1

Very good diversification

The 3 months correlation between TKO and 90331HPL1 is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding TKO Group Holdings, and US BANK NATIONAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US BANK NATIONAL 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 90331HPL1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US BANK NATIONAL has no effect on the direction of TKO Group i.e., TKO Group and 90331HPL1 go up and down completely randomly.

Pair Corralation between TKO Group and 90331HPL1

Considering the 90-day investment horizon TKO Group Holdings, is expected to generate 3.52 times more return on investment than 90331HPL1. However, TKO Group is 3.52 times more volatile than US BANK NATIONAL. It trades about 0.14 of its potential returns per unit of risk. US BANK NATIONAL is currently generating about -0.02 per unit of risk. If you would invest  8,708  in TKO Group Holdings, on October 7, 2024 and sell it today you would earn a total of  5,532  from holding TKO Group Holdings, or generate 63.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	64.76%
Values	Daily Returns

TKO Group Holdings,  vs.  US BANK NATIONAL

TKO Group Holdings,

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TKO Group Holdings, are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain forward-looking signals, TKO Group displayed solid returns over the last few months and may actually be approaching a breakup point.

US BANK NATIONAL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days US BANK NATIONAL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for US BANK NATIONAL investors.

Pair Trading with TKO Group and 90331HPL1

The main advantage of trading using opposite TKO Group and 90331HPL1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TKO Group position performs unexpectedly, 90331HPL1 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 90331HPL1 will offset losses from the drop in 90331HPL1's long position.

The idea behind TKO Group Holdings, and US BANK NATIONAL 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.