Correlation Between Fidus Investment and Joint Stock

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

Diversification Opportunities for Fidus Investment and Joint Stock

0.11

Correlation Coefficient

Fidus Investment  Joint Stock

Average diversification

The 3 months correlation between Fidus and Joint is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Fidus Investment Corp and Joint Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Joint Stock 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 Joint Stock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Joint Stock has no effect on the direction of Fidus Investment i.e., Fidus Investment and Joint Stock go up and down completely randomly.

Pair Corralation between Fidus Investment and Joint Stock

Given the investment horizon of 90 days Fidus Investment is expected to generate 3.11 times less return on investment than Joint Stock. But when comparing it to its historical volatility, Fidus Investment Corp is 3.08 times less risky than Joint Stock. It trades about 0.07 of its potential returns per unit of risk. Joint Stock is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  5,737  in Joint Stock on September 23, 2024 and sell it today you would earn a total of  4,133  from holding Joint Stock or generate 72.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	65.59%
Values	Daily Returns

Fidus Investment Corp  vs.  Joint Stock

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.

Joint Stock

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Joint Stock are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Joint Stock is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Fidus Investment and Joint Stock

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

The idea behind Fidus Investment Corp and Joint Stock 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.