Correlation Between Fidus Investment and Waste Management
Can any of the company-specific risk be diversified away by investing in both Fidus Investment and Waste Management 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 Waste Management 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 Waste Management, you can compare the effects of market volatilities on Fidus Investment and Waste Management 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 Waste Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidus Investment and Waste Management.
Diversification Opportunities for Fidus Investment and Waste Management
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fidus and Waste is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Fidus Investment Corp and Waste Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waste Management 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 Waste Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waste Management has no effect on the direction of Fidus Investment i.e., Fidus Investment and Waste Management go up and down completely randomly.
Pair Corralation between Fidus Investment and Waste Management
Given the investment horizon of 90 days Fidus Investment is expected to generate 1.48 times less return on investment than Waste Management. But when comparing it to its historical volatility, Fidus Investment Corp is 1.16 times less risky than Waste Management. It trades about 0.07 of its potential returns per unit of risk. Waste Management is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 14,800 in Waste Management on September 1, 2024 and sell it today you would earn a total of 8,022 from holding Waste Management or generate 54.2% 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. Waste Management
Performance |
| Timeline |
| Fidus Investment Corp |
| Waste Management |
Fidus Investment and Waste Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidus Investment and Waste Management
The main advantage of trading using opposite Fidus Investment and Waste Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidus Investment position performs unexpectedly, Waste Management 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 Waste Management will offset losses from the drop in Waste Management's long position.| Fidus Investment vs. Visa Class A | Fidus Investment vs. Diamond Hill Investment | Fidus Investment vs. Distoken Acquisition | Fidus Investment vs. Associated Capital Group |
| Waste Management vs. CRA International | Waste Management vs. ICF International | Waste Management vs. Forrester Research | Waste Management vs. Huron Consulting 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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