Correlation Between Fidus Investment and Federated Premier

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

Diversification Opportunities for Fidus Investment and Federated Premier

0.89

Correlation Coefficient

Fidus Investment  Federated Premier

Very poor diversification

The 3 months correlation between Fidus and Federated is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Fidus Investment Corp and Federated Premier Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Premier 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 Federated Premier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Premier has no effect on the direction of Fidus Investment i.e., Fidus Investment and Federated Premier go up and down completely randomly.

Pair Corralation between Fidus Investment and Federated Premier

Given the investment horizon of 90 days Fidus Investment Corp is expected to generate 1.64 times more return on investment than Federated Premier. However, Fidus Investment is 1.64 times more volatile than Federated Premier Municipal. It trades about 0.03 of its potential returns per unit of risk. Federated Premier Municipal is currently generating about 0.02 per unit of risk. If you would invest  2,038  in Fidus Investment Corp on December 29, 2024 and sell it today you would earn a total of  32.00  from holding Fidus Investment Corp or generate 1.57% 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.  Federated Premier Municipal

Fidus Investment Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fidus Investment Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Fidus Investment is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Federated Premier

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Federated Premier Municipal are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of very healthy primary indicators, Federated Premier 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 Federated Premier

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

The idea behind Fidus Investment Corp and Federated Premier Municipal 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.