Correlation Between Fidus Investment and PennantPark Investment
Can any of the company-specific risk be diversified away by investing in both Fidus Investment and PennantPark 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 Fidus Investment and PennantPark Investment 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 PennantPark Investment, you can compare the effects of market volatilities on Fidus Investment and PennantPark 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 Fidus Investment with a short position of PennantPark Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidus Investment and PennantPark Investment.
Diversification Opportunities for Fidus Investment and PennantPark Investment
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fidus and PennantPark is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Fidus Investment Corp and PennantPark Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennantPark 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 PennantPark Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PennantPark Investment has no effect on the direction of Fidus Investment i.e., Fidus Investment and PennantPark Investment go up and down completely randomly.
Pair Corralation between Fidus Investment and PennantPark Investment
Given the investment horizon of 90 days Fidus Investment Corp is expected to generate 0.69 times more return on investment than PennantPark Investment. However, Fidus Investment Corp is 1.46 times less risky than PennantPark Investment. It trades about 0.3 of its potential returns per unit of risk. PennantPark Investment is currently generating about 0.03 per unit of risk. 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 | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidus Investment Corp vs. PennantPark Investment
Performance |
| Timeline |
| Fidus Investment Corp |
| PennantPark Investment |
Fidus Investment and PennantPark Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidus Investment and PennantPark Investment
The main advantage of trading using opposite Fidus Investment and PennantPark Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidus Investment position performs unexpectedly, PennantPark 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 PennantPark Investment will offset losses from the drop in PennantPark Investment'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 |
| PennantPark Investment vs. Sixth Street Specialty | PennantPark Investment vs. New Mountain Finance | PennantPark Investment vs. Carlyle Secured Lending | PennantPark Investment vs. BlackRock TCP Capital |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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