Correlation Between Fidus Investment and NEXEN

Can any of the company-specific risk be diversified away by investing in both Fidus Investment and NEXEN 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 NEXEN 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 NEXEN INC 64, you can compare the effects of market volatilities on Fidus Investment and NEXEN 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 NEXEN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidus Investment and NEXEN.

Diversification Opportunities for Fidus Investment and NEXEN

0.69

Correlation Coefficient

Fidus Investment  NEXEN

Poor diversification

The 3 months correlation between Fidus and NEXEN is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Fidus Investment Corp and NEXEN INC 64 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEXEN INC 64 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 NEXEN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEXEN INC 64 has no effect on the direction of Fidus Investment i.e., Fidus Investment and NEXEN go up and down completely randomly.

Pair Corralation between Fidus Investment and NEXEN

Given the investment horizon of 90 days Fidus Investment is expected to generate 1.02 times less return on investment than NEXEN. But when comparing it to its historical volatility, Fidus Investment Corp is 1.31 times less risky than NEXEN. It trades about 0.42 of its potential returns per unit of risk. NEXEN INC 64 is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest  11,432  in NEXEN INC 64 on September 15, 2024 and sell it today you would earn a total of  174.00  from holding NEXEN INC 64 or generate 1.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	33.33%
Values	Daily Returns

Fidus Investment Corp  vs.  NEXEN INC 64

Fidus Investment Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fidus Investment Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Fidus Investment may actually be approaching a critical reversion point that can send shares even higher in January 2025.

NEXEN INC 64

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NEXEN INC 64 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for NEXEN INC 64 investors.

Pair Trading with Fidus Investment and NEXEN

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

The idea behind Fidus Investment Corp and NEXEN INC 64 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.