Correlation Between PennantPark Floating and Fidus Investment
Can any of the company-specific risk be diversified away by investing in both PennantPark Floating 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 PennantPark Floating and Fidus Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PennantPark Floating Rate and Fidus Investment Corp, you can compare the effects of market volatilities on PennantPark Floating 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 PennantPark Floating with a short position of Fidus Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennantPark Floating and Fidus Investment.
Diversification Opportunities for PennantPark Floating and Fidus Investment
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between PennantPark and Fidus is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Floating Rate 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 PennantPark Floating 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 PennantPark Floating Rate 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 PennantPark Floating i.e., PennantPark Floating and Fidus Investment go up and down completely randomly.
Pair Corralation between PennantPark Floating and Fidus Investment
Given the investment horizon of 90 days PennantPark Floating is expected to generate 2.31 times less return on investment than Fidus Investment. In addition to that, PennantPark Floating is 1.21 times more volatile than Fidus Investment Corp. It trades about 0.04 of its total potential returns per unit of risk. Fidus Investment Corp is currently generating about 0.1 per unit of volatility. If you would invest 1,894 in Fidus Investment Corp on August 24, 2024 and sell it today you would earn a total of 183.00 from holding Fidus Investment Corp or generate 9.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PennantPark Floating Rate vs. Fidus Investment Corp
Performance |
| Timeline |
| PennantPark Floating Rate |
| Fidus Investment Corp |
PennantPark Floating and Fidus Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PennantPark Floating and Fidus Investment
The main advantage of trading using opposite PennantPark Floating and Fidus Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennantPark Floating 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.| PennantPark Floating vs. Gladstone Investment | PennantPark Floating vs. Horizon Technology Finance | PennantPark Floating vs. Stellus Capital Investment | PennantPark Floating vs. Prospect Capital |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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