Correlation Between Fidus Investment and RLI Corp
Can any of the company-specific risk be diversified away by investing in both Fidus Investment and RLI Corp 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 RLI Corp 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 RLI Corp, you can compare the effects of market volatilities on Fidus Investment and RLI Corp 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 RLI Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidus Investment and RLI Corp.
Diversification Opportunities for Fidus Investment and RLI Corp
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fidus and RLI is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Fidus Investment Corp and RLI Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RLI Corp 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 RLI Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RLI Corp has no effect on the direction of Fidus Investment i.e., Fidus Investment and RLI Corp go up and down completely randomly.
Pair Corralation between Fidus Investment and RLI Corp
Given the investment horizon of 90 days Fidus Investment Corp is expected to generate 0.43 times more return on investment than RLI Corp. However, Fidus Investment Corp is 2.31 times less risky than RLI Corp. It trades about 0.09 of its potential returns per unit of risk. RLI Corp is currently generating about -0.12 per unit of risk. If you would invest 1,984 in Fidus Investment Corp on March 9, 2024 and sell it today you would earn a total of 21.00 from holding Fidus Investment Corp or generate 1.06% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 95.45% |
Values | Daily Returns |
Fidus Investment Corp vs. RLI Corp
Performance |
Timeline |
Fidus Investment Corp |
RLI Corp |
Fidus Investment and RLI Corp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Fidus Investment and RLI Corp
The main advantage of trading using opposite Fidus Investment and RLI Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidus Investment position performs unexpectedly, RLI Corp 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 RLI Corp will offset losses from the drop in RLI Corp's long position.Fidus Investment vs. Bank of New | Fidus Investment vs. Principal Financial Group | Fidus Investment vs. Brightsphere Investment Group | Fidus Investment vs. Northern Trust |
Check out your portfolio center.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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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