Correlation Between Fidus Investment and NL Industries
Can any of the company-specific risk be diversified away by investing in both Fidus Investment and NL Industries 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 NL Industries 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 NL Industries, you can compare the effects of market volatilities on Fidus Investment and NL Industries 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 NL Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidus Investment and NL Industries.
Diversification Opportunities for Fidus Investment and NL Industries
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fidus and NL Industries is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Fidus Investment Corp and NL Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NL Industries 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 NL Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NL Industries has no effect on the direction of Fidus Investment i.e., Fidus Investment and NL Industries go up and down completely randomly.
Pair Corralation between Fidus Investment and NL Industries
Given the investment horizon of 90 days Fidus Investment Corp is expected to generate 0.21 times more return on investment than NL Industries. However, Fidus Investment Corp is 4.86 times less risky than NL Industries. It trades about 0.47 of its potential returns per unit of risk. NL Industries is currently generating about 0.03 per unit of risk. If you would invest 2,038 in Fidus Investment Corp on September 14, 2024 and sell it today you would earn a total of 103.00 from holding Fidus Investment Corp or generate 5.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidus Investment Corp vs. NL Industries
Performance |
| Timeline |
| Fidus Investment Corp |
| NL Industries |
Fidus Investment and NL Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidus Investment and NL Industries
The main advantage of trading using opposite Fidus Investment and NL Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidus Investment position performs unexpectedly, NL Industries 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 NL Industries will offset losses from the drop in NL Industries' long position.| Fidus Investment vs. Visa Class A | Fidus Investment vs. Diamond Hill Investment | Fidus Investment vs. Distoken Acquisition | Fidus Investment vs. AllianceBernstein Holding LP |
| NL Industries vs. Brinks Company | NL Industries vs. Allegion PLC | NL Industries vs. Resideo Technologies | NL Industries vs. Mistras Group |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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