Correlation Between Fidus Investment and First Republic

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

Diversification Opportunities for Fidus Investment and First Republic

-0.36

Correlation Coefficient

Fidus Investment  First Republic

Very good diversification

The 3 months correlation between Fidus and First is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Fidus Investment Corp and First Republic Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Republic Bank 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 First Republic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Republic Bank has no effect on the direction of Fidus Investment i.e., Fidus Investment and First Republic go up and down completely randomly.

Pair Corralation between Fidus Investment and First Republic

Given the investment horizon of 90 days Fidus Investment Corp is expected to generate 0.03 times more return on investment than First Republic. However, Fidus Investment Corp is 32.41 times less risky than First Republic. It trades about 0.07 of its potential returns per unit of risk. First Republic Bank is currently generating about -0.04 per unit of risk. If you would invest  1,505  in Fidus Investment Corp on September 23, 2024 and sell it today you would earn a total of  543.00  from holding Fidus Investment Corp or generate 36.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	27.77%
Values	Daily Returns

Fidus Investment Corp  vs.  First Republic Bank

Fidus Investment Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fidus Investment Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Fidus Investment may actually be approaching a critical reversion point that can send shares even higher in January 2025.

First Republic Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Republic Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, First Republic is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Fidus Investment and First Republic

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

The idea behind Fidus Investment Corp and First Republic Bank 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.