Correlation Between FS KKR and Hercules Capital

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

Diversification Opportunities for FS KKR and Hercules Capital

-0.61

Correlation Coefficient

FS KKR  Hercules Capital

Excellent diversification

The 3 months correlation between FSK and Hercules is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding FS KKR Capital and Hercules Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hercules Capital 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 Hercules Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hercules Capital has no effect on the direction of FS KKR i.e., FS KKR and Hercules Capital go up and down completely randomly.

Pair Corralation between FS KKR and Hercules Capital

Considering the 90-day investment horizon FS KKR Capital is expected to under-perform the Hercules Capital. In addition to that, FS KKR is 1.77 times more volatile than Hercules Capital. It trades about -0.26 of its total potential returns per unit of risk. Hercules Capital is currently generating about 0.12 per unit of volatility. If you would invest  1,790  in Hercules Capital on June 30, 2025 and sell it today you would earn a total of  121.00  from holding Hercules Capital or generate 6.76% return on investment over 90 days.

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

FS KKR Capital  vs.  Hercules Capital

FS KKR Capital

Risk-Adjusted Performance

Weakest

Over the last 90 days FS KKR Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in October 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Hercules Capital

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Hercules Capital are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, Hercules Capital may actually be approaching a critical reversion point that can send shares even higher in October 2025.

Pair Trading with FS KKR and Hercules Capital

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

The idea behind FS KKR Capital and Hercules 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.