Correlation Between New Mountain and Fidus Investment

Can any of the company-specific risk be diversified away by investing in both New Mountain 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 New Mountain and Fidus Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between New Mountain Finance and Fidus Investment Corp, you can compare the effects of market volatilities on New Mountain 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 New Mountain with a short position of Fidus Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Mountain and Fidus Investment.

Diversification Opportunities for New Mountain and Fidus Investment

0.04

Correlation Coefficient

New Mountain  Fidus Investment

Significant diversification

The 3 months correlation between New and Fidus is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding New Mountain Finance 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 New Mountain 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 New Mountain Finance 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 New Mountain i.e., New Mountain and Fidus Investment go up and down completely randomly.

Pair Corralation between New Mountain and Fidus Investment

Given the investment horizon of 90 days New Mountain Finance is expected to under-perform the Fidus Investment. In addition to that, New Mountain is 1.26 times more volatile than Fidus Investment Corp. It trades about 0.0 of its total potential returns per unit of risk. Fidus Investment Corp is currently generating about 0.17 per unit of volatility. If you would invest  1,972  in Fidus Investment Corp on September 1, 2024 and sell it today you would earn a total of  157.00  from holding Fidus Investment Corp or generate 7.96% return on investment over 90 days.

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

New Mountain Finance  vs.  Fidus Investment Corp

New Mountain Finance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days New Mountain Finance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, New Mountain is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Fidus Investment Corp

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fidus Investment Corp are ranked lower than 13 (%) 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 December 2024.

Pair Trading with New Mountain and Fidus Investment

The main advantage of trading using opposite New Mountain and Fidus Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Mountain 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.

The idea behind New Mountain Finance and Fidus Investment Corp 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..