Correlation Between FS KKR and Federal National
Can any of the company-specific risk be diversified away by investing in both FS KKR and Federal National 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 FS KKR and Federal National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FS KKR Capital and Federal National Mortgage, you can compare the effects of market volatilities on FS KKR and Federal National 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 FS KKR with a short position of Federal National. Check out your portfolio center. Please also check ongoing floating volatility patterns of FS KKR and Federal National.
Diversification Opportunities for FS KKR and Federal National
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FSK and Federal is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding FS KKR Capital and Federal National Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal National Mortgage and FS KKR 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 FS KKR Capital are associated (or correlated) with Federal National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal National Mortgage has no effect on the direction of FS KKR i.e., FS KKR and Federal National go up and down completely randomly.
Pair Corralation between FS KKR and Federal National
Considering the 90-day investment horizon FS KKR is expected to generate 7.76 times less return on investment than Federal National. But when comparing it to its historical volatility, FS KKR Capital is 7.47 times less risky than Federal National. It trades about 0.11 of its potential returns per unit of risk. Federal National Mortgage is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 133.00 in Federal National Mortgage on October 29, 2024 and sell it today you would earn a total of 441.00 from holding Federal National Mortgage or generate 331.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
FS KKR Capital vs. Federal National Mortgage
Performance |
| Timeline |
| FS KKR Capital |
| Federal National Mortgage |
FS KKR and Federal National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FS KKR and Federal National
The main advantage of trading using opposite FS KKR and Federal National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FS KKR position performs unexpectedly, Federal National 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 Federal National will offset losses from the drop in Federal National's long position.| FS KKR vs. BlackRock TCP Capital | FS KKR vs. Triplepoint Venture Growth | FS KKR vs. Sixth Street Specialty | FS KKR vs. Golub Capital BDC |
| Federal National vs. Allient | Federal National vs. BJs Restaurants | Federal National vs. Flanigans Enterprises | Federal National vs. RCI Hospitality Holdings |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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