Correlation Between FS KKR and GameStop Corp

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

Diversification Opportunities for FS KKR and GameStop Corp

0.93

Correlation Coefficient

FS KKR  GameStop Corp

Almost no diversification

The 3 months correlation between FSK and GameStop is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding FS KKR Capital and GameStop Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GameStop Corp 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 GameStop Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GameStop Corp has no effect on the direction of FS KKR i.e., FS KKR and GameStop Corp go up and down completely randomly.

Pair Corralation between FS KKR and GameStop Corp

Considering the 90-day investment horizon FS KKR Capital is expected to under-perform the GameStop Corp. But the stock apears to be less risky and, when comparing its historical volatility, FS KKR Capital is 5.1 times less risky than GameStop Corp. The stock trades about -0.01 of its potential returns per unit of risk. The GameStop Corp is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  2,793  in GameStop Corp on October 10, 2024 and sell it today you would earn a total of  503.00  from holding GameStop Corp or generate 18.01% return on investment over 90 days.

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

FS KKR Capital  vs.  GameStop Corp

FS KKR Capital

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in FS KKR Capital are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, FS KKR may actually be approaching a critical reversion point that can send shares even higher in February 2025.

GameStop Corp

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in GameStop Corp are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent primary indicators, GameStop Corp exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FS KKR and GameStop Corp

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

The idea behind FS KKR Capital and GameStop Corp 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.