Correlation Between Fidus Investment and Vita Coco

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

Diversification Opportunities for Fidus Investment and Vita Coco

0.8

Correlation Coefficient

Fidus Investment  Vita Coco

Very poor diversification

The 3 months correlation between Fidus and Vita is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Fidus Investment Corp and Vita Coco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vita Coco 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 Vita Coco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vita Coco has no effect on the direction of Fidus Investment i.e., Fidus Investment and Vita Coco go up and down completely randomly.

Pair Corralation between Fidus Investment and Vita Coco

Given the investment horizon of 90 days Fidus Investment is expected to generate 2.17 times less return on investment than Vita Coco. But when comparing it to its historical volatility, Fidus Investment Corp is 3.33 times less risky than Vita Coco. It trades about 0.1 of its potential returns per unit of risk. Vita Coco is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,666  in Vita Coco on September 14, 2024 and sell it today you would earn a total of  980.50  from holding Vita Coco or generate 36.78% return on investment over 90 days.

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

Fidus Investment Corp  vs.  Vita Coco

Fidus Investment Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fidus Investment Corp are ranked lower than 14 (%) 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.

Vita Coco

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vita Coco are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal fundamental indicators, Vita Coco displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fidus Investment and Vita Coco

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

The idea behind Fidus Investment Corp and Vita Coco 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.

Check out your portfolio center.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.