Correlation Between Blue Moon and Fidus Investment

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

By analyzing existing cross correlation between Blue Moon Metals and Fidus Investment Corp, you can compare the effects of market volatilities on Blue Moon and Fidus Investment 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 Blue Moon with a short position of Fidus Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blue Moon and Fidus Investment.

Diversification Opportunities for Blue Moon and Fidus Investment

-0.26

Correlation Coefficient

Blue Moon  Fidus Investment

Very good diversification

The 3 months correlation between Blue and Fidus is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Blue Moon Metals and Fidus Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidus Investment Corp and Blue Moon 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 Blue Moon Metals are associated (or correlated) with Fidus Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidus Investment Corp has no effect on the direction of Blue Moon i.e., Blue Moon and Fidus Investment go up and down completely randomly.

Pair Corralation between Blue Moon and Fidus Investment

Assuming the 90 days horizon Blue Moon Metals is expected to generate 120.55 times more return on investment than Fidus Investment. However, Blue Moon is 120.55 times more volatile than Fidus Investment Corp. It trades about 0.12 of its potential returns per unit of risk. Fidus Investment Corp is currently generating about 0.05 per unit of risk. If you would invest  25.00  in Blue Moon Metals on December 24, 2024 and sell it today you would earn a total of  225.00  from holding Blue Moon Metals or generate 900.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.31%
Values	Daily Returns

Blue Moon Metals  vs.  Fidus Investment Corp

Blue Moon Metals

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Moon Metals are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Blue Moon reported solid returns over the last few months and may actually be approaching a breakup point.

Fidus Investment Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fidus Investment Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Fidus Investment is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Blue Moon and Fidus Investment

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

The idea behind Blue Moon Metals and Fidus Investment Corp 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.