Correlation Between Monroe Capital and Fidus Investment

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

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

Diversification Opportunities for Monroe Capital and Fidus Investment

0.68

Correlation Coefficient

Monroe Capital  Fidus Investment

Poor diversification

The 3 months correlation between Monroe and Fidus is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Monroe Capital Corp 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 Monroe Capital 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 Monroe Capital Corp 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 Monroe Capital i.e., Monroe Capital and Fidus Investment go up and down completely randomly.

Pair Corralation between Monroe Capital and Fidus Investment

Given the investment horizon of 90 days Monroe Capital Corp is expected to generate 1.88 times more return on investment than Fidus Investment. However, Monroe Capital is 1.88 times more volatile than Fidus Investment Corp. It trades about 0.13 of its potential returns per unit of risk. Fidus Investment Corp is currently generating about 0.17 per unit of risk. If you would invest  763.00  in Monroe Capital Corp on September 3, 2024 and sell it today you would earn a total of  89.00  from holding Monroe Capital Corp or generate 11.66% return on investment over 90 days.

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

Monroe Capital Corp  vs.  Fidus Investment Corp

Monroe Capital Corp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Monroe Capital Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, Monroe Capital may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Fidus Investment Corp

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fidus Investment Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Fidus Investment may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Monroe Capital and Fidus Investment

The main advantage of trading using opposite Monroe Capital and Fidus Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monroe Capital 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 Monroe Capital Corp 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.