Correlation Between TPG and Carlyle

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

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

Diversification Opportunities for TPG and Carlyle

0.59

Correlation Coefficient

TPG  Carlyle

Very weak diversification

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

Pair Corralation between TPG and Carlyle

Considering the 90-day investment horizon TPG Inc is expected to under-perform the Carlyle. But the stock apears to be less risky and, when comparing its historical volatility, TPG Inc is 1.04 times less risky than Carlyle. The stock trades about -0.2 of its potential returns per unit of risk. The Carlyle Group is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  5,287  in Carlyle Group on November 28, 2024 and sell it today you would lose (398.00) from holding Carlyle Group or give up 7.53% of portfolio value over 90 days.

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

TPG Inc  vs.  Carlyle Group

TPG Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days TPG Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Carlyle Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Carlyle Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with TPG and Carlyle

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

The idea behind TPG Inc and Carlyle Group 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.