Correlation Between Fidus Investment and NISOURCE

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

Diversification Opportunities for Fidus Investment and NISOURCE

-0.6

Correlation Coefficient

Fidus Investment  NISOURCE

Excellent diversification

The 3 months correlation between Fidus and NISOURCE is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Fidus Investment Corp and NISOURCE FIN P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NISOURCE FIN P 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 NISOURCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NISOURCE FIN P has no effect on the direction of Fidus Investment i.e., Fidus Investment and NISOURCE go up and down completely randomly.

Pair Corralation between Fidus Investment and NISOURCE

Given the investment horizon of 90 days Fidus Investment Corp is expected to generate 1.16 times more return on investment than NISOURCE. However, Fidus Investment is 1.16 times more volatile than NISOURCE FIN P. It trades about 0.05 of its potential returns per unit of risk. NISOURCE FIN P is currently generating about -0.15 per unit of risk. If you would invest  2,078  in Fidus Investment Corp on October 10, 2024 and sell it today you would earn a total of  16.00  from holding Fidus Investment Corp or generate 0.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	90.48%
Values	Daily Returns

Fidus Investment Corp  vs.  NISOURCE FIN P

Fidus Investment Corp

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fidus Investment Corp are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Fidus Investment may actually be approaching a critical reversion point that can send shares even higher in February 2025.

NISOURCE FIN P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NISOURCE FIN P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, NISOURCE is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fidus Investment and NISOURCE

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

The idea behind Fidus Investment Corp and NISOURCE FIN P 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.