Correlation Between Phenixfin and Fidus Investment

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

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

Diversification Opportunities for Phenixfin and Fidus Investment

0.02

Correlation Coefficient

Phenixfin  Fidus Investment

Significant diversification

The 3 months correlation between Phenixfin and Fidus is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Phenixfin 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 Phenixfin 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 Phenixfin 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 Phenixfin i.e., Phenixfin and Fidus Investment go up and down completely randomly.

Pair Corralation between Phenixfin and Fidus Investment

Considering the 90-day investment horizon Phenixfin is expected to generate 2.34 times less return on investment than Fidus Investment. In addition to that, Phenixfin is 1.92 times more volatile than Fidus Investment Corp. It trades about 0.04 of its total potential returns per unit of risk. Fidus Investment Corp is currently generating about 0.16 per unit of volatility. If you would invest  1,968  in Fidus Investment Corp on September 5, 2024 and sell it today you would earn a total of  150.00  from holding Fidus Investment Corp or generate 7.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	93.75%
Values	Daily Returns

Phenixfin  vs.  Fidus Investment Corp

Phenixfin

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Phenixfin are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, Phenixfin is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fidus Investment Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fidus Investment Corp are ranked lower than 12 (%) 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.

Pair Trading with Phenixfin and Fidus Investment

The main advantage of trading using opposite Phenixfin and Fidus Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Phenixfin 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 Phenixfin 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 CEOs Directory module to screen CEOs from public companies around the world.