Correlation Between Fidus Investment and Denison Mines

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

Diversification Opportunities for Fidus Investment and Denison Mines

-0.35

Correlation Coefficient

Fidus Investment  Denison Mines

Very good diversification

The 3 months correlation between Fidus and Denison is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Fidus Investment Corp and Denison Mines Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Denison Mines Corp 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 Denison Mines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Denison Mines Corp has no effect on the direction of Fidus Investment i.e., Fidus Investment and Denison Mines go up and down completely randomly.

Pair Corralation between Fidus Investment and Denison Mines

Given the investment horizon of 90 days Fidus Investment is expected to generate 1.9 times less return on investment than Denison Mines. But when comparing it to its historical volatility, Fidus Investment Corp is 5.67 times less risky than Denison Mines. It trades about 0.32 of its potential returns per unit of risk. Denison Mines Corp is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  190.00  in Denison Mines Corp on October 26, 2024 and sell it today you would earn a total of  14.00  from holding Denison Mines Corp or generate 7.37% return on investment over 90 days.

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

Fidus Investment Corp  vs.  Denison Mines Corp

Fidus Investment Corp

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fidus Investment Corp are ranked lower than 22 (%) 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.

Denison Mines Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Denison Mines Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Denison Mines is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Fidus Investment and Denison Mines

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

The idea behind Fidus Investment Corp and Denison Mines 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..