Correlation Between Sixth Street and FS KKR
Can any of the company-specific risk be diversified away by investing in both Sixth 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 Sixth 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 Sixth Street Specialty and FS KKR Capital, you can compare the effects of market volatilities on Sixth 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 Sixth Street with a short position of FS KKR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sixth Street and FS KKR.
Diversification Opportunities for Sixth Street and FS KKR
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Sixth and FSK is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Sixth Street Specialty 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 Sixth 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 Sixth Street Specialty 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 Sixth Street i.e., Sixth Street and FS KKR go up and down completely randomly.
Pair Corralation between Sixth Street and FS KKR
Given the investment horizon of 90 days Sixth Street is expected to generate 2.12 times less return on investment than FS KKR. But when comparing it to its historical volatility, Sixth Street Specialty is 1.07 times less risky than FS KKR. It trades about 0.12 of its potential returns per unit of risk. FS KKR Capital is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 1,884 in FS KKR Capital on November 2, 2024 and sell it today you would earn a total of 427.00 from holding FS KKR Capital or generate 22.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sixth Street Specialty vs. FS KKR Capital
Performance |
| Timeline |
| Sixth Street Specialty |
| FS KKR Capital |
Sixth Street and FS KKR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sixth Street and FS KKR
The main advantage of trading using opposite Sixth Street and FS KKR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sixth 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.| Sixth Street vs. New Mountain Finance | Sixth Street vs. Carlyle Secured Lending | Sixth Street vs. BlackRock TCP Capital | Sixth Street vs. Fidus Investment Corp |
| 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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