Correlation Between Fidus Investment and Eaton Vance

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

Diversification Opportunities for Fidus Investment and Eaton Vance

-0.56

Correlation Coefficient

Fidus Investment  Eaton Vance

Excellent diversification

The 3 months correlation between Fidus and Eaton is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Fidus Investment Corp and Eaton Vance National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Vance National 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 Eaton Vance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eaton Vance National has no effect on the direction of Fidus Investment i.e., Fidus Investment and Eaton Vance go up and down completely randomly.

Pair Corralation between Fidus Investment and Eaton Vance

Given the investment horizon of 90 days Fidus Investment Corp is expected to generate 1.53 times more return on investment than Eaton Vance. However, Fidus Investment is 1.53 times more volatile than Eaton Vance National. It trades about 0.17 of its potential returns per unit of risk. Eaton Vance National is currently generating about 0.04 per unit of risk. If you would invest  1,972  in Fidus Investment Corp on September 3, 2024 and sell it today you would earn a total of  157.00  from holding Fidus Investment Corp or generate 7.96% return on investment over 90 days.

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

Fidus Investment Corp  vs.  Eaton Vance National

Fidus Investment Corp

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fidus Investment Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Fidus Investment may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Eaton Vance National

Risk-Adjusted Performance

3 of 100

Weak

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

Pair Trading with Fidus Investment and Eaton Vance

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

The idea behind Fidus Investment Corp and Eaton Vance National 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.