Correlation Between Fidus Investment and Falcons Beyond

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

Diversification Opportunities for Fidus Investment and Falcons Beyond

0.25

Correlation Coefficient

Fidus Investment  Falcons Beyond

Modest diversification

The 3 months correlation between Fidus and Falcons is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Fidus Investment Corp and Falcons Beyond Global, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Falcons Beyond Global, 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 Falcons Beyond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Falcons Beyond Global, has no effect on the direction of Fidus Investment i.e., Fidus Investment and Falcons Beyond go up and down completely randomly.

Pair Corralation between Fidus Investment and Falcons Beyond

Given the investment horizon of 90 days Fidus Investment is expected to generate 1.09 times less return on investment than Falcons Beyond. But when comparing it to its historical volatility, Fidus Investment Corp is 7.08 times less risky than Falcons Beyond. It trades about 0.12 of its potential returns per unit of risk. Falcons Beyond Global, is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  933.00  in Falcons Beyond Global, on September 21, 2024 and sell it today you would lose (39.84) from holding Falcons Beyond Global, or give up 4.27% of portfolio value over 90 days.

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

Fidus Investment Corp  vs.  Falcons Beyond Global,

Fidus Investment Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fidus Investment Corp are ranked lower than 11 (%) 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.

Falcons Beyond Global,

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Falcons Beyond Global, are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal basic indicators, Falcons Beyond exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fidus Investment and Falcons Beyond

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

The idea behind Fidus Investment Corp and Falcons Beyond Global, 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.