Correlation Between FS KKR and FREEPORT

Can any of the company-specific risk be diversified away by investing in both FS KKR and FREEPORT 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 FREEPORT 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 FREEPORT MCMORAN INC 525, you can compare the effects of market volatilities on FS KKR and FREEPORT 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 FREEPORT. Check out your portfolio center. Please also check ongoing floating volatility patterns of FS KKR and FREEPORT.

Diversification Opportunities for FS KKR and FREEPORT

-0.06

Correlation Coefficient

FS KKR  FREEPORT

Good diversification

The 3 months correlation between FSK and FREEPORT is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding FS KKR Capital and FREEPORT MCMORAN INC 525 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FREEPORT MCMORAN INC 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 FREEPORT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FREEPORT MCMORAN INC has no effect on the direction of FS KKR i.e., FS KKR and FREEPORT go up and down completely randomly.

Pair Corralation between FS KKR and FREEPORT

Considering the 90-day investment horizon FS KKR Capital is expected to generate 1.67 times more return on investment than FREEPORT. However, FS KKR is 1.67 times more volatile than FREEPORT MCMORAN INC 525. It trades about 0.33 of its potential returns per unit of risk. FREEPORT MCMORAN INC 525 is currently generating about -0.04 per unit of risk. If you would invest  2,015  in FS KKR Capital on October 7, 2024 and sell it today you would earn a total of  185.00  from holding FS KKR Capital or generate 9.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.56%
Values	Daily Returns

FS KKR Capital  vs.  FREEPORT MCMORAN INC 525

FS KKR Capital

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in FS KKR Capital are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, FS KKR disclosed solid returns over the last few months and may actually be approaching a breakup point.

FREEPORT MCMORAN INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FREEPORT MCMORAN INC 525 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, FREEPORT is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with FS KKR and FREEPORT

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

The idea behind FS KKR Capital and FREEPORT MCMORAN INC 525 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 Valuation module to check real value of public entities based on technical and fundamental data.