Correlation Between Sixth Street and FS KKR

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

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

Diversification Opportunities for Sixth Street and FS KKR

0.6

Correlation Coefficient

Sixth Street  FS KKR

Poor diversification

The 3 months correlation between Sixth and FSK is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Sixth Street Specialty 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 Sixth Street 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 Sixth Street Specialty 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 Sixth Street i.e., Sixth Street and FS KKR go up and down completely randomly.

Pair Corralation between Sixth Street and FS KKR

Given the investment horizon of 90 days Sixth Street Specialty is expected to under-perform the FS KKR. But the stock apears to be less risky and, when comparing its historical volatility, Sixth Street Specialty is 1.02 times less risky than FS KKR. The stock trades about -0.07 of its potential returns per unit of risk. The FS KKR Capital is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  1,630  in FS KKR Capital on September 10, 2025 and sell it today you would lose (76.00) from holding FS KKR Capital or give up 4.66% of portfolio value over 90 days.

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

Sixth Street Specialty  vs.  FS KKR Capital

Sixth Street Specialty

Risk-Adjusted Performance

Weakest

Over the last 90 days Sixth Street Specialty has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong essential indicators, Sixth Street is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

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 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 Sixth Street and FS KKR

The main advantage of trading using opposite Sixth Street and FS KKR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sixth Street 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 Sixth Street Specialty 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.