Correlation Between MFS Investment and Fidus Investment
Can any of the company-specific risk be diversified away by investing in both MFS Investment 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 MFS Investment and Fidus Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MFS Investment Grade and Fidus Investment Corp, you can compare the effects of market volatilities on MFS Investment 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 MFS Investment with a short position of Fidus Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFS Investment and Fidus Investment.
Diversification Opportunities for MFS Investment and Fidus Investment
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between MFS and Fidus is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding MFS Investment Grade 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 MFS Investment 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 MFS Investment Grade 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 MFS Investment i.e., MFS Investment and Fidus Investment go up and down completely randomly.
Pair Corralation between MFS Investment and Fidus Investment
Considering the 90-day investment horizon MFS Investment is expected to generate 6.66 times less return on investment than Fidus Investment. But when comparing it to its historical volatility, MFS Investment Grade is 1.65 times less risky than Fidus Investment. It trades about 0.07 of its potential returns per unit of risk. Fidus Investment Corp is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 1,953 in Fidus Investment Corp on August 24, 2024 and sell it today you would earn a total of 124.00 from holding Fidus Investment Corp or generate 6.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
MFS Investment Grade vs. Fidus Investment Corp
Performance |
| Timeline |
| MFS Investment Grade |
| Fidus Investment Corp |
MFS Investment and Fidus Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MFS Investment and Fidus Investment
The main advantage of trading using opposite MFS Investment and Fidus Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MFS Investment 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.| MFS Investment vs. Invesco High Income | MFS Investment vs. Eaton Vance National | MFS Investment vs. Nuveen California Select | MFS Investment vs. Federated Premier Municipal |
| Fidus Investment vs. Invesco Advantage MIT | Fidus Investment vs. Invesco Municipal Trust | Fidus Investment vs. Invesco California Value | Fidus Investment vs. Victory Capital Holdings |
Check out your portfolio center.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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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