Correlation Between Fidus Investment and Montauk Renewables

Can any of the company-specific risk be diversified away by investing in both Fidus Investment and Montauk Renewables 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 Montauk Renewables 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 Montauk Renewables, you can compare the effects of market volatilities on Fidus Investment and Montauk Renewables 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 Montauk Renewables. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidus Investment and Montauk Renewables.

Diversification Opportunities for Fidus Investment and Montauk Renewables

-0.83

Correlation Coefficient

Fidus Investment  Montauk Renewables

Pay attention - limited upside

The 3 months correlation between Fidus and Montauk is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Fidus Investment Corp and Montauk Renewables in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Montauk Renewables 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 Montauk Renewables. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Montauk Renewables has no effect on the direction of Fidus Investment i.e., Fidus Investment and Montauk Renewables go up and down completely randomly.

Pair Corralation between Fidus Investment and Montauk Renewables

Given the investment horizon of 90 days Fidus Investment Corp is expected to generate 0.18 times more return on investment than Montauk Renewables. However, Fidus Investment Corp is 5.6 times less risky than Montauk Renewables. It trades about 0.14 of its potential returns per unit of risk. Montauk Renewables is currently generating about -0.05 per unit of risk. If you would invest  1,974  in Fidus Investment Corp on September 17, 2024 and sell it today you would earn a total of  129.00  from holding Fidus Investment Corp or generate 6.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Fidus Investment Corp  vs.  Montauk Renewables

Fidus Investment Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fidus Investment Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Fidus Investment is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Montauk Renewables

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Montauk Renewables has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Fidus Investment and Montauk Renewables

The main advantage of trading using opposite Fidus Investment and Montauk Renewables positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidus Investment position performs unexpectedly, Montauk Renewables 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 Montauk Renewables will offset losses from the drop in Montauk Renewables' long position.

The idea behind Fidus Investment Corp and Montauk Renewables pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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.