Correlation Between Fidus Investment and Gladstone Investment

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

Diversification Opportunities for Fidus Investment and Gladstone Investment

0.25

Correlation Coefficient

Fidus Investment  Gladstone Investment

Modest diversification

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

Pair Corralation between Fidus Investment and Gladstone Investment

Given the investment horizon of 90 days Fidus Investment is expected to generate 1.58 times less return on investment than Gladstone Investment. But when comparing it to its historical volatility, Fidus Investment Corp is 1.79 times less risky than Gladstone Investment. It trades about 0.22 of its potential returns per unit of risk. Gladstone Investment is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  1,189  in Gladstone Investment on September 12, 2024 and sell it today you would earn a total of  192.00  from holding Gladstone Investment or generate 16.15% return on investment over 90 days.

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

Fidus Investment Corp  vs.  Gladstone Investment

Fidus Investment Corp

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fidus Investment Corp are ranked lower than 17 (%) 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.

Gladstone Investment

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gladstone Investment are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward indicators, Gladstone Investment displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fidus Investment and Gladstone Investment

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

The idea behind Fidus Investment Corp and Gladstone Investment 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.