Correlation Between Associated Capital and FS Credit
Can any of the company-specific risk be diversified away by investing in both Associated Capital and FS Credit 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 Associated Capital and FS Credit into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Associated Capital Group and FS Credit Opportunities, you can compare the effects of market volatilities on Associated Capital and FS Credit 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 Associated Capital with a short position of FS Credit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associated Capital and FS Credit.
Diversification Opportunities for Associated Capital and FS Credit
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Associated and FSCO is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Associated Capital Group and FS Credit Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FS Credit Opportunities and Associated Capital 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 Associated Capital Group are associated (or correlated) with FS Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FS Credit Opportunities has no effect on the direction of Associated Capital i.e., Associated Capital and FS Credit go up and down completely randomly.
Pair Corralation between Associated Capital and FS Credit
Allowing for the 90-day total investment horizon Associated Capital is expected to generate 5.58 times less return on investment than FS Credit. In addition to that, Associated Capital is 1.32 times more volatile than FS Credit Opportunities. It trades about 0.02 of its total potential returns per unit of risk. FS Credit Opportunities is currently generating about 0.14 per unit of volatility. If you would invest 387.00 in FS Credit Opportunities on August 27, 2024 and sell it today you would earn a total of 263.00 from holding FS Credit Opportunities or generate 67.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Associated Capital Group vs. FS Credit Opportunities
Performance |
| Timeline |
| Associated Capital |
| FS Credit Opportunities |
Associated Capital and FS Credit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Associated Capital and FS Credit
The main advantage of trading using opposite Associated Capital and FS Credit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Associated Capital position performs unexpectedly, FS Credit 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 FS Credit will offset losses from the drop in FS Credit's long position.| Associated Capital vs. PowerUp Acquisition Corp | Associated Capital vs. Aurora Innovation | Associated Capital vs. HUMANA INC | Associated Capital vs. Aquagold International |
| FS Credit vs. MFS Investment Grade | FS Credit vs. Invesco High Income | FS Credit vs. Eaton Vance National | FS Credit vs. Federated Premier Municipal |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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