Correlation Between BKV and KKR Co
Can any of the company-specific risk be diversified away by investing in both BKV 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 BKV and KKR Co into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BKV Corporation and KKR Co LP, you can compare the effects of market volatilities on BKV 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 BKV with a short position of KKR Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of BKV and KKR Co.
Diversification Opportunities for BKV and KKR Co
Poor diversification
The 3 months correlation between BKV and KKR is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding BKV Corp. 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 BKV 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 BKV Corporation 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 BKV i.e., BKV and KKR Co go up and down completely randomly.
Pair Corralation between BKV and KKR Co
Considering the 90-day investment horizon BKV Corporation is expected to generate 0.89 times more return on investment than KKR Co. However, BKV Corporation is 1.12 times less risky than KKR Co. It trades about 0.17 of its potential returns per unit of risk. KKR Co LP is currently generating about 0.13 per unit of risk. If you would invest 1,800 in BKV Corporation on September 24, 2024 and sell it today you would earn a total of 369.00 from holding BKV Corporation or generate 20.5% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 25.3% |
Values | Daily Returns |
BKV Corp. vs. KKR Co LP
Performance |
Timeline |
BKV Corporation |
KKR Co LP |
BKV and KKR Co Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with BKV and KKR Co
The main advantage of trading using opposite BKV and KKR Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BKV 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.BKV vs. Antero Resources Corp | BKV vs. Empire Petroleum Corp | BKV vs. Permian Resources | BKV vs. SandRidge Energy |
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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