Correlation Between FS KKR and Triplepoint Venture

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

Diversification Opportunities for FS KKR and Triplepoint Venture

0.86

Correlation Coefficient

FS KKR  Triplepoint Venture

Very poor diversification

The 3 months correlation between FSK and Triplepoint is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding FS KKR Capital and Triplepoint Venture Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Triplepoint Venture 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 Triplepoint Venture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Triplepoint Venture has no effect on the direction of FS KKR i.e., FS KKR and Triplepoint Venture go up and down completely randomly.

Pair Corralation between FS KKR and Triplepoint Venture

Considering the 90-day investment horizon FS KKR is expected to generate 3.53 times less return on investment than Triplepoint Venture. But when comparing it to its historical volatility, FS KKR Capital is 1.2 times less risky than Triplepoint Venture. It trades about 0.01 of its potential returns per unit of risk. Triplepoint Venture Growth is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  694.00  in Triplepoint Venture Growth on December 29, 2024 and sell it today you would earn a total of  19.00  from holding Triplepoint Venture Growth or generate 2.74% return on investment over 90 days.

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

FS KKR Capital  vs.  Triplepoint Venture Growth

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.

Triplepoint Venture

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Triplepoint Venture Growth are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Triplepoint Venture is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with FS KKR and Triplepoint Venture

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

The idea behind FS KKR Capital and Triplepoint Venture Growth 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 Transaction History module to view history of all your transactions and understand their impact on performance.