Correlation Between Fidus Investment and Top Frontier

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

Diversification Opportunities for Fidus Investment and Top Frontier

-0.65

Correlation Coefficient

Fidus Investment  Top Frontier

Excellent diversification

The 3 months correlation between Fidus and Top is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Fidus Investment Corp and Top Frontier Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Top Frontier Investment 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 Top Frontier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Top Frontier Investment has no effect on the direction of Fidus Investment i.e., Fidus Investment and Top Frontier go up and down completely randomly.

Pair Corralation between Fidus Investment and Top Frontier

Given the investment horizon of 90 days Fidus Investment Corp is expected to generate 0.17 times more return on investment than Top Frontier. However, Fidus Investment Corp is 5.72 times less risky than Top Frontier. It trades about 0.08 of its potential returns per unit of risk. Top Frontier Investment is currently generating about -0.13 per unit of risk. If you would invest  2,028  in Fidus Investment Corp on December 19, 2024 and sell it today you would earn a total of  91.00  from holding Fidus Investment Corp or generate 4.49% return on investment over 90 days.

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

Fidus Investment Corp  vs.  Top Frontier Investment

Fidus Investment Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fidus Investment Corp are ranked lower than 6 (%) 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.

Top Frontier Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Top Frontier Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Fidus Investment and Top Frontier

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

The idea behind Fidus Investment Corp and Top Frontier Investment 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.