Correlation Between DWS Municipal and Fidus Investment
Can any of the company-specific risk be diversified away by investing in both DWS Municipal 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 DWS Municipal and Fidus Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DWS Municipal Income and Fidus Investment Corp, you can compare the effects of market volatilities on DWS Municipal 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 DWS Municipal with a short position of Fidus Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of DWS Municipal and Fidus Investment.
Diversification Opportunities for DWS Municipal and Fidus Investment
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between DWS and Fidus is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding DWS Municipal Income 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 DWS Municipal 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 DWS Municipal Income 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 DWS Municipal i.e., DWS Municipal and Fidus Investment go up and down completely randomly.
Pair Corralation between DWS Municipal and Fidus Investment
Considering the 90-day investment horizon DWS Municipal is expected to generate 2.49 times less return on investment than Fidus Investment. But when comparing it to its historical volatility, DWS Municipal Income is 1.38 times less risky than Fidus Investment. It trades about 0.21 of its potential returns per unit of risk. Fidus Investment Corp is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest 1,966 in Fidus Investment Corp on August 27, 2024 and sell it today you would earn a total of 140.00 from holding Fidus Investment Corp or generate 7.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DWS Municipal Income vs. Fidus Investment Corp
Performance |
| Timeline |
| DWS Municipal Income |
| Fidus Investment Corp |
DWS Municipal and Fidus Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DWS Municipal and Fidus Investment
The main advantage of trading using opposite DWS Municipal and Fidus Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DWS Municipal 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.| DWS Municipal vs. DTF Tax Free | DWS Municipal vs. Blackrock Muniyield Quality | DWS Municipal vs. Blackrock Muni Intermediate | DWS Municipal vs. Blackrock Muniholdings Quality |
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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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