Correlation Between Fidus Investment and GE Vernova

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

Diversification Opportunities for Fidus Investment and GE Vernova

0.81

Correlation Coefficient

Fidus Investment  GE Vernova

Very poor diversification

The 3 months correlation between Fidus and GEV is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Fidus Investment Corp and GE Vernova LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GE Vernova LLC 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 GE Vernova. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GE Vernova LLC has no effect on the direction of Fidus Investment i.e., Fidus Investment and GE Vernova go up and down completely randomly.

Pair Corralation between Fidus Investment and GE Vernova

Given the investment horizon of 90 days Fidus Investment is expected to generate 1.14 times less return on investment than GE Vernova. But when comparing it to its historical volatility, Fidus Investment Corp is 3.59 times less risky than GE Vernova. It trades about 0.09 of its potential returns per unit of risk. GE Vernova LLC is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  33,959  in GE Vernova LLC on September 22, 2024 and sell it today you would earn a total of  307.00  from holding GE Vernova LLC or generate 0.9% 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.  GE Vernova LLC

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 abnormal basic indicators, Fidus Investment may actually be approaching a critical reversion point that can send shares even higher in January 2025.

GE Vernova LLC

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GE Vernova LLC are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain technical and fundamental indicators, GE Vernova showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fidus Investment and GE Vernova

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

The idea behind Fidus Investment Corp and GE Vernova LLC 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.