Correlation Between Fidus Investment and Franklin Resources

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

Diversification Opportunities for Fidus Investment and Franklin Resources

-0.71

Correlation Coefficient

Fidus Investment  Franklin Resources

Pay attention - limited upside

The 3 months correlation between Fidus and Franklin is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Fidus Investment Corp and Franklin Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Resources 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 Franklin Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Resources has no effect on the direction of Fidus Investment i.e., Fidus Investment and Franklin Resources go up and down completely randomly.

Pair Corralation between Fidus Investment and Franklin Resources

Given the investment horizon of 90 days Fidus Investment Corp is expected to generate 0.41 times more return on investment than Franklin Resources. However, Fidus Investment Corp is 2.45 times less risky than Franklin Resources. It trades about 0.08 of its potential returns per unit of risk. Franklin Resources is currently generating about -0.13 per unit of risk. If you would invest  2,002  in Fidus Investment Corp on March 11, 2024 and sell it today you would earn a total of  16.00  from holding Fidus Investment Corp or generate 0.8% return on investment over 90 days.

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

Fidus Investment Corp  vs.  Franklin Resources

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 unfluctuating basic indicators, Fidus Investment may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Franklin Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Franklin Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in July 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Fidus Investment and Franklin Resources

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

The idea behind Fidus Investment Corp and Franklin Resources 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.