Correlation Between Fidus Investment and Montana Technologies

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

Diversification Opportunities for Fidus Investment and Montana Technologies

0.77

Correlation Coefficient

Fidus Investment  Montana Technologies

Poor diversification

The 3 months correlation between Fidus and Montana is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Fidus Investment Corp and Montana Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Montana Technologies 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 Montana Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Montana Technologies has no effect on the direction of Fidus Investment i.e., Fidus Investment and Montana Technologies go up and down completely randomly.

Pair Corralation between Fidus Investment and Montana Technologies

Given the investment horizon of 90 days Fidus Investment is expected to generate 2.42 times less return on investment than Montana Technologies. But when comparing it to its historical volatility, Fidus Investment Corp is 7.54 times less risky than Montana Technologies. It trades about 0.21 of its potential returns per unit of risk. Montana Technologies is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  800.00  in Montana Technologies on October 25, 2024 and sell it today you would earn a total of  77.00  from holding Montana Technologies or generate 9.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	97.44%
Values	Daily Returns

Fidus Investment Corp  vs.  Montana Technologies

Fidus Investment Corp

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fidus Investment Corp are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Fidus Investment unveiled solid returns over the last few months and may actually be approaching a breakup point.

Montana Technologies

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Montana Technologies are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Montana Technologies revealed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fidus Investment and Montana Technologies

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

The idea behind Fidus Investment Corp and Montana Technologies 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.