Correlation Between Montauk Renewables and Fidus Investment

Can any of the company-specific risk be diversified away by investing in both Montauk Renewables and Fidus Investment 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 Montauk Renewables and Fidus Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Montauk Renewables and Fidus Investment Corp, you can compare the effects of market volatilities on Montauk Renewables and Fidus Investment 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 Montauk Renewables with a short position of Fidus Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Montauk Renewables and Fidus Investment.

Diversification Opportunities for Montauk Renewables and Fidus Investment

0.38

Correlation Coefficient

Montauk Renewables  Fidus Investment

Weak diversification

The 3 months correlation between Montauk and Fidus is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Montauk Renewables and Fidus Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidus Investment Corp and Montauk Renewables 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 Montauk Renewables are associated (or correlated) with Fidus Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidus Investment Corp has no effect on the direction of Montauk Renewables i.e., Montauk Renewables and Fidus Investment go up and down completely randomly.

Pair Corralation between Montauk Renewables and Fidus Investment

Given the investment horizon of 90 days Montauk Renewables is expected to under-perform the Fidus Investment. In addition to that, Montauk Renewables is 6.1 times more volatile than Fidus Investment Corp. It trades about -0.14 of its total potential returns per unit of risk. Fidus Investment Corp is currently generating about 0.03 per unit of volatility. If you would invest  2,038  in Fidus Investment Corp on December 28, 2024 and sell it today you would earn a total of  32.00  from holding Fidus Investment Corp or generate 1.57% return on investment over 90 days.

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

Montauk Renewables  vs.  Fidus Investment Corp

Montauk Renewables

Risk-Adjusted Performance

Very Weak

Over the last 90 days Montauk Renewables 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 basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Fidus Investment Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fidus Investment Corp are ranked lower than 2 (%) 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.

Pair Trading with Montauk Renewables and Fidus Investment

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

The idea behind Montauk Renewables and Fidus Investment Corp 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.