Correlation Between Main Street and FS KKR
Can any of the company-specific risk be diversified away by investing in both Main Street and FS KKR 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 KKR 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 KKR Capital, you can compare the effects of market volatilities on Main Street and FS KKR 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 KKR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Main Street and FS KKR.
Diversification Opportunities for Main Street and FS KKR
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Main and FSK is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Main Street Capital and FS KKR Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FS KKR Capital 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 KKR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FS KKR Capital has no effect on the direction of Main Street i.e., Main Street and FS KKR go up and down completely randomly.
Pair Corralation between Main Street and FS KKR
Given the investment horizon of 90 days Main Street is expected to generate 1.16 times less return on investment than FS KKR. In addition to that, Main Street is 1.0 times more volatile than FS KKR Capital. It trades about 0.27 of its total potential returns per unit of risk. FS KKR Capital is currently generating about 0.32 per unit of volatility. If you would invest 2,073 in FS KKR Capital on August 28, 2024 and sell it today you would earn a total of 128.00 from holding FS KKR Capital or generate 6.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Main Street Capital vs. FS KKR Capital
Performance |
| Timeline |
| Main Street Capital |
| FS KKR Capital |
Main Street and FS KKR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Main Street and FS KKR
The main advantage of trading using opposite Main Street and FS KKR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Main Street position performs unexpectedly, FS KKR 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 KKR will offset losses from the drop in FS KKR'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 KKR vs. BlackRock TCP Capital | FS KKR vs. Triplepoint Venture Growth | FS KKR vs. Sixth Street Specialty | FS KKR vs. Golub Capital BDC |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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