Correlation Between Morningstar Unconstrained and FS KKR

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

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

Diversification Opportunities for Morningstar Unconstrained and FS KKR

-0.53

Correlation Coefficient

Morningstar Unconstrained  FS KKR

Excellent diversification

The 3 months correlation between Morningstar and FSK is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Morningstar Unconstrained Allo 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 Morningstar Unconstrained 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 Morningstar Unconstrained Allocation 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 Morningstar Unconstrained i.e., Morningstar Unconstrained and FS KKR go up and down completely randomly.

Pair Corralation between Morningstar Unconstrained and FS KKR

Assuming the 90 days horizon Morningstar Unconstrained is expected to generate 4.31 times less return on investment than FS KKR. But when comparing it to its historical volatility, Morningstar Unconstrained Allocation is 1.37 times less risky than FS KKR. It trades about 0.03 of its potential returns per unit of risk. FS KKR Capital is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,431  in FS KKR Capital on October 12, 2024 and sell it today you would earn a total of  707.00  from holding FS KKR Capital or generate 49.41% return on investment over 90 days.

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

Morningstar Unconstrained Allo  vs.  FS KKR Capital

Morningstar Unconstrained

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Morningstar Unconstrained Allocation has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

FS KKR Capital

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FS KKR Capital are ranked lower than 14 (%) 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.

Pair Trading with Morningstar Unconstrained and FS KKR

The main advantage of trading using opposite Morningstar Unconstrained and FS KKR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morningstar Unconstrained 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 Morningstar Unconstrained Allocation 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.

Check out your portfolio center.

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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.