Correlation Between Main Street and FS Credit
Can any of the company-specific risk be diversified away by investing in both Main Street 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 Main Street and FS Credit into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Main Street Capital and FS Credit Opportunities, you can compare the effects of market volatilities on Main Street 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 Main Street with a short position of FS Credit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Main Street and FS Credit.
Diversification Opportunities for Main Street and FS Credit
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Main and FSCO is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Main Street Capital 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 Main Street 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 Main Street Capital 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 Main Street i.e., Main Street and FS Credit go up and down completely randomly.
Pair Corralation between Main Street and FS Credit
Given the investment horizon of 90 days Main Street Capital is expected to generate 0.92 times more return on investment than FS Credit. However, Main Street Capital is 1.09 times less risky than FS Credit. It trades about 0.39 of its potential returns per unit of risk. FS Credit Opportunities is currently generating about 0.18 per unit of risk. If you would invest 5,620 in Main Street Capital on October 24, 2024 and sell it today you would earn a total of 384.00 from holding Main Street Capital or generate 6.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Main Street Capital vs. FS Credit Opportunities
Performance |
| Timeline |
| Main Street Capital |
| FS Credit Opportunities |
Main Street and FS Credit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Main Street and FS Credit
The main advantage of trading using opposite Main Street and FS Credit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Main Street 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.| Main Street vs. Gladstone Capital | Main Street vs. PennantPark Floating Rate | Main Street vs. Horizon Technology Finance | Main Street vs. Prospect Capital |
| FS Credit vs. MFS Investment Grade | FS Credit vs. Eaton Vance National | FS Credit vs. Federated Premier Municipal | FS Credit vs. Investcorp Credit Management |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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