Correlation Between NESNVX and Fidus Investment

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

By analyzing existing cross correlation between NESNVX 125 15 SEP 30 and Fidus Investment Corp, you can compare the effects of market volatilities on NESNVX 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 NESNVX with a short position of Fidus Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of NESNVX and Fidus Investment.

Diversification Opportunities for NESNVX and Fidus Investment

0.49

Correlation Coefficient

NESNVX  Fidus Investment

Very weak diversification

The 3 months correlation between NESNVX and Fidus is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding NESNVX 125 15 SEP 30 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 NESNVX 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 NESNVX 125 15 SEP 30 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 NESNVX i.e., NESNVX and Fidus Investment go up and down completely randomly.

Pair Corralation between NESNVX and Fidus Investment

Assuming the 90 days trading horizon NESNVX 125 15 SEP 30 is expected to under-perform the Fidus Investment. But the bond apears to be less risky and, when comparing its historical volatility, NESNVX 125 15 SEP 30 is 1.03 times less risky than Fidus Investment. The bond trades about -0.32 of its potential returns per unit of risk. The Fidus Investment Corp is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  1,882  in Fidus Investment Corp on October 8, 2024 and sell it today you would earn a total of  237.00  from holding Fidus Investment Corp or generate 12.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	35.48%
Values	Daily Returns

NESNVX 125 15 SEP 30  vs.  Fidus Investment Corp

NESNVX 125 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NESNVX 125 15 SEP 30 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for NESNVX 125 15 SEP 30 investors.

Fidus Investment Corp

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fidus Investment Corp are ranked lower than 19 (%) 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 NESNVX and Fidus Investment

The main advantage of trading using opposite NESNVX and Fidus Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NESNVX 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 NESNVX 125 15 SEP 30 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.