Correlation Between Fidus Investment and Aegon NV

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

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

Diversification Opportunities for Fidus Investment and Aegon NV

0.24

Correlation Coefficient

Fidus Investment  Aegon NV

Modest diversification

The 3 months correlation between Fidus and Aegon is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Fidus Investment Corp and Aegon NV ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aegon NV ADR and Fidus Investment 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 Fidus Investment Corp are associated (or correlated) with Aegon NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aegon NV ADR has no effect on the direction of Fidus Investment i.e., Fidus Investment and Aegon NV go up and down completely randomly.

Pair Corralation between Fidus Investment and Aegon NV

Given the investment horizon of 90 days Fidus Investment Corp is expected to generate 0.48 times more return on investment than Aegon NV. However, Fidus Investment Corp is 2.08 times less risky than Aegon NV. It trades about 0.19 of its potential returns per unit of risk. Aegon NV ADR is currently generating about 0.07 per unit of risk. If you would invest  1,972  in Fidus Investment Corp on September 13, 2024 and sell it today you would earn a total of  169.00  from holding Fidus Investment Corp or generate 8.57% return on investment over 90 days.

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

Fidus Investment Corp  vs.  Aegon NV ADR

Fidus Investment Corp

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fidus Investment Corp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Fidus Investment may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Aegon NV ADR

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aegon NV ADR are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Aegon NV is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Fidus Investment and Aegon NV

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

The idea behind Fidus Investment Corp and Aegon NV ADR 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.