Correlation Between KKR Co and Macys

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

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

Diversification Opportunities for KKR Co and Macys

0.53

Correlation Coefficient

KKR Co  Macys

Very weak diversification

The 3 months correlation between KKR and Macys is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding KKR Co LP and Macys Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macys Inc and KKR Co 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 KKR Co LP are associated (or correlated) with Macys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macys Inc has no effect on the direction of KKR Co i.e., KKR Co and Macys go up and down completely randomly.

Pair Corralation between KKR Co and Macys

Considering the 90-day investment horizon KKR Co LP is expected to generate 0.67 times more return on investment than Macys. However, KKR Co LP is 1.49 times less risky than Macys. It trades about 0.13 of its potential returns per unit of risk. Macys Inc is currently generating about 0.01 per unit of risk. If you would invest  4,587  in KKR Co LP on September 24, 2024 and sell it today you would earn a total of  10,171  from holding KKR Co LP or generate 221.74% return on investment over 90 days.

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

KKR Co LP  vs.  Macys Inc

KKR Co LP

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in KKR Co LP are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile forward-looking signals, KKR Co may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Macys Inc

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Macys Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Macys may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with KKR Co and Macys

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

The idea behind KKR Co LP and Macys 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.