Correlation Between Boston Beer and Fidus Investment

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

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

Diversification Opportunities for Boston Beer and Fidus Investment

0.78

Correlation Coefficient

Boston Beer  Fidus Investment

Poor diversification

The 3 months correlation between Boston and Fidus is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Boston Beer 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 Boston Beer 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 Boston Beer 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 Boston Beer i.e., Boston Beer and Fidus Investment go up and down completely randomly.

Pair Corralation between Boston Beer and Fidus Investment

Considering the 90-day investment horizon Boston Beer is expected to generate 2.16 times more return on investment than Fidus Investment. However, Boston Beer is 2.16 times more volatile than Fidus Investment Corp. It trades about 0.11 of its potential returns per unit of risk. Fidus Investment Corp is currently generating about 0.14 per unit of risk. If you would invest  27,637  in Boston Beer on September 17, 2024 and sell it today you would earn a total of  3,113  from holding Boston Beer or generate 11.26% return on investment over 90 days.

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

Boston Beer  vs.  Fidus Investment Corp

Boston Beer

Risk-Adjusted Performance

8 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Boston Beer are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Boston Beer may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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.

Pair Trading with Boston Beer and Fidus Investment

The main advantage of trading using opposite Boston Beer and Fidus Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Beer 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 Boston Beer 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.