Correlation Between Primo Brands and Fidus Investment

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

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

Diversification Opportunities for Primo Brands and Fidus Investment

0.89

Correlation Coefficient

Primo Brands  Fidus Investment

Very poor diversification

The 3 months correlation between Primo and Fidus is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Primo Brands 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 Primo Brands 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 Primo Brands 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 Primo Brands i.e., Primo Brands and Fidus Investment go up and down completely randomly.

Pair Corralation between Primo Brands and Fidus Investment

Given the investment horizon of 90 days Primo Brands is expected to generate 2.45 times more return on investment than Fidus Investment. However, Primo Brands is 2.45 times more volatile than Fidus Investment Corp. It trades about 0.15 of its potential returns per unit of risk. Fidus Investment Corp is currently generating about 0.13 per unit of risk. If you would invest  2,192  in Primo Brands on September 15, 2024 and sell it today you would earn a total of  908.00  from holding Primo Brands or generate 41.42% return on investment over 90 days.

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

Primo Brands  vs.  Fidus Investment Corp

Primo Brands

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Primo Brands are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak primary indicators, Primo Brands sustained solid returns over the last few months and may actually be approaching a breakup point.

Fidus Investment Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fidus Investment Corp are ranked lower than 14 (%) 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 Primo Brands and Fidus Investment

The main advantage of trading using opposite Primo Brands and Fidus Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Primo Brands 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 Primo Brands 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.