Correlation Between Investcorp Credit and FS Credit

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

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

Diversification Opportunities for Investcorp Credit and FS Credit

0.36

Correlation Coefficient

Investcorp Credit  FS Credit

Weak diversification

The 3 months correlation between Investcorp and FSCO is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Investcorp Credit Management and FS Credit Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FS Credit Opportunities and Investcorp Credit 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 Investcorp Credit Management are associated (or correlated) with FS Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FS Credit Opportunities has no effect on the direction of Investcorp Credit i.e., Investcorp Credit and FS Credit go up and down completely randomly.

Pair Corralation between Investcorp Credit and FS Credit

Given the investment horizon of 90 days Investcorp Credit is expected to generate 1.34 times less return on investment than FS Credit. In addition to that, Investcorp Credit is 2.2 times more volatile than FS Credit Opportunities. It trades about 0.06 of its total potential returns per unit of risk. FS Credit Opportunities is currently generating about 0.18 per unit of volatility. If you would invest  681.00  in FS Credit Opportunities on May 5, 2025 and sell it today you would earn a total of  64.00  from holding FS Credit Opportunities or generate 9.4% return on investment over 90 days.

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

Investcorp Credit Management  vs.  FS Credit Opportunities

Investcorp Credit

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Investcorp Credit Management are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain primary indicators, Investcorp Credit may actually be approaching a critical reversion point that can send shares even higher in September 2025.

FS Credit Opportunities

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FS Credit Opportunities are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, FS Credit may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Investcorp Credit and FS Credit

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

The idea behind Investcorp Credit Management and FS Credit Opportunities 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.