Correlation Between Boston Beer and FS KKR

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

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

Diversification Opportunities for Boston Beer and FS KKR

-0.11

Correlation Coefficient

Boston Beer  FS KKR

Good diversification

The 3 months correlation between Boston and FSK is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Boston Beer 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 Boston Beer 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 Boston Beer 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 Boston Beer i.e., Boston Beer and FS KKR go up and down completely randomly.

Pair Corralation between Boston Beer and FS KKR

Considering the 90-day investment horizon Boston Beer is expected to under-perform the FS KKR. In addition to that, Boston Beer is 2.68 times more volatile than FS KKR Capital. It trades about -0.4 of its total potential returns per unit of risk. FS KKR Capital is currently generating about 0.26 per unit of volatility. If you would invest  2,146  in FS KKR Capital on October 22, 2024 and sell it today you would earn a total of  80.00  from holding FS KKR Capital or generate 3.73% return on investment over 90 days.

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

Boston Beer  vs.  FS KKR Capital

Boston Beer

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Boston Beer has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

FS KKR Capital

Risk-Adjusted Performance

17 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FS KKR Capital are ranked lower than 17 (%) 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 Boston Beer and FS KKR

The main advantage of trading using opposite Boston Beer and FS KKR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Beer 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 Boston Beer 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.