Correlation Between Fidus Investment and Sun Life

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

Diversification Opportunities for Fidus Investment and Sun Life

0.92

Correlation Coefficient

Fidus Investment  Sun Life

Almost no diversification

The 3 months correlation between Fidus and Sun is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Fidus Investment Corp and Sun Life Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Life Financial 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 Sun Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Life Financial has no effect on the direction of Fidus Investment i.e., Fidus Investment and Sun Life go up and down completely randomly.

Pair Corralation between Fidus Investment and Sun Life

Given the investment horizon of 90 days Fidus Investment Corp is expected to generate 0.67 times more return on investment than Sun Life. However, Fidus Investment Corp is 1.5 times less risky than Sun Life. It trades about 0.35 of its potential returns per unit of risk. Sun Life Financial is currently generating about 0.01 per unit of risk. If you would invest  2,069  in Fidus Investment Corp on September 17, 2024 and sell it today you would earn a total of  69.00  from holding Fidus Investment Corp or generate 3.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Fidus Investment Corp  vs.  Sun Life Financial

Fidus Investment Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fidus Investment Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Fidus Investment may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Sun Life Financial

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Life Financial are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, Sun Life may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Fidus Investment and Sun Life

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

The idea behind Fidus Investment Corp and Sun Life Financial 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.