Correlation Between Xp and KKR Co

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

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

Diversification Opportunities for Xp and KKR Co

-0.66

Correlation Coefficient

Xp  KKR Co

Excellent diversification

The 3 months correlation between Xp and KKR is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Xp Inc and KKR Co LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KKR Co LP and Xp 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 Xp Inc are associated (or correlated) with KKR Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KKR Co LP has no effect on the direction of Xp i.e., Xp and KKR Co go up and down completely randomly.

Pair Corralation between Xp and KKR Co

Allowing for the 90-day total investment horizon Xp Inc is expected to under-perform the KKR Co. In addition to that, Xp is 1.24 times more volatile than KKR Co LP. It trades about -0.31 of its total potential returns per unit of risk. KKR Co LP is currently generating about 0.09 per unit of volatility. If you would invest  14,057  in KKR Co LP on September 27, 2024 and sell it today you would earn a total of  1,195  from holding KKR Co LP or generate 8.5% return on investment over 90 days.

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

Xp Inc  vs.  KKR Co LP

Xp Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xp Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with abnormal performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

KKR Co LP

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in KKR Co LP are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile forward-looking signals, KKR Co reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Xp and KKR Co

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

The idea behind Xp Inc and KKR Co LP 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.