Correlation Between Nuvalent and Fidus Investment

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

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

Diversification Opportunities for Nuvalent and Fidus Investment

-0.64

Correlation Coefficient

Nuvalent  Fidus Investment

Excellent diversification

The 3 months correlation between Nuvalent and Fidus is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Nuvalent 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 Nuvalent 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 Nuvalent 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 Nuvalent i.e., Nuvalent and Fidus Investment go up and down completely randomly.

Pair Corralation between Nuvalent and Fidus Investment

Given the investment horizon of 90 days Nuvalent is expected to generate 4.02 times more return on investment than Fidus Investment. However, Nuvalent is 4.02 times more volatile than Fidus Investment Corp. It trades about 0.02 of its potential returns per unit of risk. Fidus Investment Corp is currently generating about 0.08 per unit of risk. If you would invest  7,423  in Nuvalent on October 9, 2024 and sell it today you would earn a total of  386.00  from holding Nuvalent or generate 5.2% return on investment over 90 days.

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

Nuvalent  vs.  Fidus Investment Corp

Nuvalent

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nuvalent 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 February 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

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fidus Investment Corp are ranked lower than 17 (%) 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.

Pair Trading with Nuvalent and Fidus Investment

The main advantage of trading using opposite Nuvalent and Fidus Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nuvalent 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 Nuvalent 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.