Correlation Between Western Asset and Fidus Investment
Can any of the company-specific risk be diversified away by investing in both Western Asset 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 Western Asset and Fidus Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Diversified and Fidus Investment Corp, you can compare the effects of market volatilities on Western Asset 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 Western Asset with a short position of Fidus Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Fidus Investment.
Diversification Opportunities for Western Asset and Fidus Investment
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Western and Fidus is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Diversified 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 Western Asset 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 Western Asset Diversified 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 Western Asset i.e., Western Asset and Fidus Investment go up and down completely randomly.
Pair Corralation between Western Asset and Fidus Investment
Considering the 90-day investment horizon Western Asset is expected to generate 71.08 times less return on investment than Fidus Investment. But when comparing it to its historical volatility, Western Asset Diversified is 1.23 times less risky than Fidus Investment. It trades about 0.01 of its potential returns per unit of risk. Fidus Investment Corp is currently generating about 0.45 of returns per unit of risk over similar time horizon. If you would invest 1,948 in Fidus Investment Corp on August 31, 2024 and sell it today you would earn a total of 160.00 from holding Fidus Investment Corp or generate 8.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Diversified vs. Fidus Investment Corp
Performance |
| Timeline |
| Western Asset Diversified |
| Fidus Investment Corp |
Western Asset and Fidus Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Fidus Investment
The main advantage of trading using opposite Western Asset and Fidus Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset 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.| Western Asset vs. Neuberger Berman Next | Western Asset vs. Doubleline Yield Opportunities | Western Asset vs. PIMCO Access Income | Western Asset vs. Blackrock Innovation Growth |
| Fidus Investment vs. Ares Capital | Fidus Investment vs. Hercules Capital | Fidus Investment vs. Main Street 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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