Correlation Between Virgin Group and FS KKR

Can any of the company-specific risk be diversified away by investing in both Virgin Group and FS KKR 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 Virgin Group and FS KKR into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Virgin Group Acquisition and FS KKR Capital, you can compare the effects of market volatilities on Virgin Group and FS KKR 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 Virgin Group with a short position of FS KKR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virgin Group and FS KKR.

Diversification Opportunities for Virgin Group and FS KKR

0.47

Correlation Coefficient

Virgin Group  FS KKR

Very weak diversification

The 3 months correlation between Virgin and FSK is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Virgin Group Acquisition and FS KKR Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FS KKR Capital and Virgin Group 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 Virgin Group Acquisition are associated (or correlated) with FS KKR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FS KKR Capital has no effect on the direction of Virgin Group i.e., Virgin Group and FS KKR go up and down completely randomly.

Pair Corralation between Virgin Group and FS KKR

Given the investment horizon of 90 days Virgin Group Acquisition is expected to generate 3.29 times more return on investment than FS KKR. However, Virgin Group is 3.29 times more volatile than FS KKR Capital. It trades about 0.09 of its potential returns per unit of risk. FS KKR Capital is currently generating about 0.01 per unit of risk. If you would invest  137.00  in Virgin Group Acquisition on December 19, 2024 and sell it today you would earn a total of  26.00  from holding Virgin Group Acquisition or generate 18.98% return on investment over 90 days.

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

Virgin Group Acquisition  vs.  FS KKR Capital

Virgin Group Acquisition

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Virgin Group Acquisition are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Virgin Group showed solid returns over the last few months and may actually be approaching a breakup point.

FS KKR Capital

Risk-Adjusted Performance

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.

Pair Trading with Virgin Group and FS KKR

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

The idea behind Virgin Group Acquisition and FS KKR 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.