Correlation Between FS KKR and Gladstone Capital

Can any of the company-specific risk be diversified away by investing in both FS KKR and Gladstone Capital 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 Gladstone Capital 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 Gladstone Capital, you can compare the effects of market volatilities on FS KKR and Gladstone Capital 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 Gladstone Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of FS KKR and Gladstone Capital.

Diversification Opportunities for FS KKR and Gladstone Capital

0.55

Correlation Coefficient

FS KKR  Gladstone Capital

Very weak diversification

The 3 months correlation between FSK and Gladstone is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding FS KKR Capital and Gladstone Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gladstone Capital 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 Gladstone Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gladstone Capital has no effect on the direction of FS KKR i.e., FS KKR and Gladstone Capital go up and down completely randomly.

Pair Corralation between FS KKR and Gladstone Capital

Considering the 90-day investment horizon FS KKR Capital is expected to generate 0.97 times more return on investment than Gladstone Capital. However, FS KKR Capital is 1.03 times less risky than Gladstone Capital. It trades about 0.01 of its potential returns per unit of risk. Gladstone Capital is currently generating about 0.0 per unit of risk. If you would invest  2,099  in FS KKR Capital on December 28, 2024 and sell it today you would earn a total of  0.00  from holding FS KKR Capital or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

FS KKR Capital  vs.  Gladstone Capital

FS KKR Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days FS KKR Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, FS KKR is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Gladstone Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gladstone Capital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Gladstone Capital is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with FS KKR and Gladstone Capital

The main advantage of trading using opposite FS KKR and Gladstone Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FS KKR position performs unexpectedly, Gladstone Capital 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 Gladstone Capital will offset losses from the drop in Gladstone Capital's long position.

The idea behind FS KKR Capital and Gladstone Capital pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.