Correlation Between Fidus Investment and Thunder Bridge

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

Diversification Opportunities for Fidus Investment and Thunder Bridge

0.75

Correlation Coefficient

Fidus Investment  Thunder Bridge

Poor diversification

The 3 months correlation between Fidus and Thunder is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Fidus Investment Corp and Thunder Bridge Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thunder Bridge Capital 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 Thunder Bridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thunder Bridge Capital has no effect on the direction of Fidus Investment i.e., Fidus Investment and Thunder Bridge go up and down completely randomly.

Pair Corralation between Fidus Investment and Thunder Bridge

Given the investment horizon of 90 days Fidus Investment is expected to generate 2.25 times less return on investment than Thunder Bridge. But when comparing it to its historical volatility, Fidus Investment Corp is 3.62 times less risky than Thunder Bridge. It trades about 0.18 of its potential returns per unit of risk. Thunder Bridge Capital is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,049  in Thunder Bridge Capital on September 16, 2024 and sell it today you would earn a total of  175.00  from holding Thunder Bridge Capital or generate 16.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.38%
Values	Daily Returns

Fidus Investment Corp  vs.  Thunder Bridge Capital

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.

Thunder Bridge Capital

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Thunder Bridge Capital are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain fundamental indicators, Thunder Bridge reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fidus Investment and Thunder Bridge

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

The idea behind Fidus Investment Corp and Thunder Bridge Capital 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.