Correlation Between Fidus Investment and FactSet Research

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

Diversification Opportunities for Fidus Investment and FactSet Research

0.85

Correlation Coefficient

Fidus Investment  FactSet Research

Very poor diversification

The 3 months correlation between Fidus and FactSet is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Fidus Investment Corp and FactSet Research Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FactSet Research Systems 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 FactSet Research. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FactSet Research Systems has no effect on the direction of Fidus Investment i.e., Fidus Investment and FactSet Research go up and down completely randomly.

Pair Corralation between Fidus Investment and FactSet Research

Given the investment horizon of 90 days Fidus Investment is expected to generate 1.39 times less return on investment than FactSet Research. But when comparing it to its historical volatility, Fidus Investment Corp is 1.55 times less risky than FactSet Research. It trades about 0.12 of its potential returns per unit of risk. FactSet Research Systems is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  41,422  in FactSet Research Systems on September 21, 2024 and sell it today you would earn a total of  6,104  from holding FactSet Research Systems or generate 14.74% 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.  FactSet Research Systems

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.

FactSet Research Systems

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in FactSet Research Systems are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, FactSet Research is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Fidus Investment and FactSet Research

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

The idea behind Fidus Investment Corp and FactSet Research Systems 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.