Correlation Between 90041LAF2 and TPG

Can any of the company-specific risk be diversified away by investing in both 90041LAF2 and TPG 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 90041LAF2 and TPG into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between US90041LAF22 and TPG Inc, you can compare the effects of market volatilities on 90041LAF2 and TPG 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 90041LAF2 with a short position of TPG. Check out your portfolio center. Please also check ongoing floating volatility patterns of 90041LAF2 and TPG.

Diversification Opportunities for 90041LAF2 and TPG

0.27

Correlation Coefficient

90041LAF2  TPG

Modest diversification

The 3 months correlation between 90041LAF2 and TPG is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding US90041LAF22 and TPG Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TPG Inc and 90041LAF2 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 US90041LAF22 are associated (or correlated) with TPG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TPG Inc has no effect on the direction of 90041LAF2 i.e., 90041LAF2 and TPG go up and down completely randomly.

Pair Corralation between 90041LAF2 and TPG

Assuming the 90 days trading horizon US90041LAF22 is expected to generate 0.1 times more return on investment than TPG. However, US90041LAF22 is 10.05 times less risky than TPG. It trades about -0.28 of its potential returns per unit of risk. TPG Inc is currently generating about -0.1 per unit of risk. If you would invest  9,993  in US90041LAF22 on October 7, 2024 and sell it today you would lose (62.00) from holding US90041LAF22 or give up 0.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	55.0%
Values	Daily Returns

US90041LAF22  vs.  TPG Inc

US90041LAF22

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days US90041LAF22 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 90041LAF2 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

TPG Inc

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in TPG Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, TPG may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with 90041LAF2 and TPG

The main advantage of trading using opposite 90041LAF2 and TPG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 90041LAF2 position performs unexpectedly, TPG 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 TPG will offset losses from the drop in TPG's long position.

The idea behind US90041LAF22 and TPG 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.