Correlation Between FS KKR and Visa

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

Diversification Opportunities for FS KKR and Visa

0.94

Correlation Coefficient

FS KKR  Visa

Almost no diversification

The 3 months correlation between FSK and Visa is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding FS KKR Capital and Visa Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Visa Class A 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 Visa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Visa Class A has no effect on the direction of FS KKR i.e., FS KKR and Visa go up and down completely randomly.

Pair Corralation between FS KKR and Visa

Considering the 90-day investment horizon FS KKR is expected to generate 1.76 times less return on investment than Visa. In addition to that, FS KKR is 1.03 times more volatile than Visa Class A. It trades about 0.15 of its total potential returns per unit of risk. Visa Class A is currently generating about 0.27 per unit of volatility. If you would invest  31,248  in Visa Class A on December 3, 2024 and sell it today you would earn a total of  5,023  from holding Visa Class A or generate 16.07% 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.  Visa Class A

FS KKR Capital

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FS KKR Capital are ranked lower than 11 (%) 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 April 2025.

Visa Class A

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Visa showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FS KKR and Visa

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

The idea behind FS KKR Capital and Visa Class A 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..