Correlation Between Fidus Investment and Nuvalent

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

Diversification Opportunities for Fidus Investment and Nuvalent

-0.1

Correlation Coefficient

Fidus Investment  Nuvalent

Good diversification

The 3 months correlation between Fidus and Nuvalent is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Fidus Investment Corp and Nuvalent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuvalent 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 Nuvalent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuvalent has no effect on the direction of Fidus Investment i.e., Fidus Investment and Nuvalent go up and down completely randomly.

Pair Corralation between Fidus Investment and Nuvalent

Given the investment horizon of 90 days Fidus Investment Corp is expected to generate 0.36 times more return on investment than Nuvalent. However, Fidus Investment Corp is 2.79 times less risky than Nuvalent. It trades about 0.06 of its potential returns per unit of risk. Nuvalent is currently generating about -0.04 per unit of risk. If you would invest  2,048  in Fidus Investment Corp on December 20, 2024 and sell it today you would earn a total of  65.00  from holding Fidus Investment Corp or generate 3.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Fidus Investment Corp  vs.  Nuvalent

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.

Nuvalent

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nuvalent has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Fidus Investment and Nuvalent

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

The idea behind Fidus Investment Corp and Nuvalent 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.