Correlation Between Fidus Investment and New Mountain

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

Diversification Opportunities for Fidus Investment and New Mountain

0.87

Correlation Coefficient

Fidus Investment  New Mountain

Very poor diversification

The 3 months correlation between Fidus and New is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Fidus Investment Corp and New Mountain Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Mountain Finance 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 New Mountain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Mountain Finance has no effect on the direction of Fidus Investment i.e., Fidus Investment and New Mountain go up and down completely randomly.

Pair Corralation between Fidus Investment and New Mountain

Given the investment horizon of 90 days Fidus Investment Corp is expected to generate 1.07 times more return on investment than New Mountain. However, Fidus Investment is 1.07 times more volatile than New Mountain Finance. It trades about 0.06 of its potential returns per unit of risk. New Mountain Finance is currently generating about 0.04 per unit of risk. If you would invest  2,033  in Fidus Investment Corp on December 27, 2024 and sell it today you would earn a total of  63.00  from holding Fidus Investment Corp or generate 3.1% 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.  New Mountain Finance

Fidus Investment Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fidus Investment Corp are ranked lower than 4 (%) 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.

New Mountain Finance

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in New Mountain Finance are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, New Mountain is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Fidus Investment and New Mountain

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

The idea behind Fidus Investment Corp and New Mountain Finance 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..