Correlation Between Fidus Investment and Diamond Hill
Can any of the company-specific risk be diversified away by investing in both Fidus Investment and Diamond Hill 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 Fidus Investment and Diamond Hill into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidus Investment Corp and Diamond Hill Investment, you can compare the effects of market volatilities on Fidus Investment and Diamond Hill 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 Fidus Investment with a short position of Diamond Hill. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidus Investment and Diamond Hill.
Diversification Opportunities for Fidus Investment and Diamond Hill
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fidus and Diamond is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Fidus Investment Corp and Diamond Hill Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamond Hill Investment and Fidus 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 Fidus Investment Corp are associated (or correlated) with Diamond Hill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diamond Hill Investment has no effect on the direction of Fidus Investment i.e., Fidus Investment and Diamond Hill go up and down completely randomly.
Pair Corralation between Fidus Investment and Diamond Hill
Given the investment horizon of 90 days Fidus Investment is expected to generate 1.86 times less return on investment than Diamond Hill. But when comparing it to its historical volatility, Fidus Investment Corp is 2.31 times less risky than Diamond Hill. It trades about 0.3 of its potential returns per unit of risk. Diamond Hill Investment is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 15,255 in Diamond Hill Investment on August 24, 2024 and sell it today you would earn a total of 1,711 from holding Diamond Hill Investment or generate 11.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Fidus Investment Corp vs. Diamond Hill Investment
Performance |
| Timeline |
| Fidus Investment Corp |
| Diamond Hill Investment |
Fidus Investment and Diamond Hill Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidus Investment and Diamond Hill
The main advantage of trading using opposite Fidus Investment and Diamond Hill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidus Investment position performs unexpectedly, Diamond Hill 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 Diamond Hill will offset losses from the drop in Diamond Hill's long position.| Fidus Investment vs. Invesco Advantage MIT | Fidus Investment vs. Invesco Municipal Trust | Fidus Investment vs. Invesco California Value | Fidus Investment vs. Victory Capital Holdings |
| Diamond Hill vs. Federated Premier Municipal | Diamond Hill vs. Blackrock Muniyield | Diamond Hill vs. NXG NextGen Infrastructure | Diamond Hill vs. Federated Investors B |
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 Stocks Directory module to find actively traded stocks across global markets.
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