Correlation Between Fidus Investment and MCKESSON

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

Diversification Opportunities for Fidus Investment and MCKESSON

-0.34

Correlation Coefficient

Fidus Investment  MCKESSON

Very good diversification

The 3 months correlation between Fidus and MCKESSON is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Fidus Investment Corp and MCKESSON P NEW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MCKESSON P NEW 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 MCKESSON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MCKESSON P NEW has no effect on the direction of Fidus Investment i.e., Fidus Investment and MCKESSON go up and down completely randomly.

Pair Corralation between Fidus Investment and MCKESSON

Given the investment horizon of 90 days Fidus Investment Corp is expected to generate 0.97 times more return on investment than MCKESSON. However, Fidus Investment Corp is 1.03 times less risky than MCKESSON. It trades about 0.1 of its potential returns per unit of risk. MCKESSON P NEW is currently generating about -0.07 per unit of risk. If you would invest  1,903  in Fidus Investment Corp on September 19, 2024 and sell it today you would earn a total of  89.00  from holding Fidus Investment Corp or generate 4.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	76.56%
Values	Daily Returns

Fidus Investment Corp  vs.  MCKESSON P NEW

Fidus Investment Corp

Risk-Adjusted Performance

8 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fidus Investment Corp are ranked lower than 8 (%) 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.

MCKESSON P NEW

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MCKESSON P NEW has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, MCKESSON is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fidus Investment and MCKESSON

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

The idea behind Fidus Investment Corp and MCKESSON P NEW 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.