Correlation Between Fidus Investment and TruBridge

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

Diversification Opportunities for Fidus Investment and TruBridge

0.77

Correlation Coefficient

Fidus Investment  TruBridge

Poor diversification

The 3 months correlation between Fidus and TruBridge is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Fidus Investment Corp and TruBridge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TruBridge 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 TruBridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TruBridge has no effect on the direction of Fidus Investment i.e., Fidus Investment and TruBridge go up and down completely randomly.

Pair Corralation between Fidus Investment and TruBridge

Given the investment horizon of 90 days Fidus Investment is expected to generate 12.4 times less return on investment than TruBridge. But when comparing it to its historical volatility, Fidus Investment Corp is 2.67 times less risky than TruBridge. It trades about 0.06 of its potential returns per unit of risk. TruBridge is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  1,819  in TruBridge on December 20, 2024 and sell it today you would earn a total of  894.00  from holding TruBridge or generate 49.15% return on investment over 90 days.

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

Fidus Investment Corp  vs.  TruBridge

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.

TruBridge

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TruBridge are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, TruBridge reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fidus Investment and TruBridge

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

The idea behind Fidus Investment Corp and TruBridge 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.