Correlation Between Bank of America and Fidus Investment

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

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

Diversification Opportunities for Bank of America and Fidus Investment

0.85

Correlation Coefficient

Bank of America  Fidus Investment

Very poor diversification

The 3 months correlation between Bank and Fidus is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America 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 Bank of America 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 Bank of America 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 Bank of America i.e., Bank of America and Fidus Investment go up and down completely randomly.

Pair Corralation between Bank of America and Fidus Investment

Assuming the 90 days trading horizon Bank of America is expected to generate 2.17 times less return on investment than Fidus Investment. But when comparing it to its historical volatility, Bank of America is 2.5 times less risky than Fidus Investment. It trades about 0.23 of its potential returns per unit of risk. Fidus Investment Corp is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  1,829  in Fidus Investment Corp on May 7, 2025 and sell it today you would earn a total of  230.00  from holding Fidus Investment Corp or generate 12.58% return on investment over 90 days.

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

Bank of America  vs.  Fidus Investment Corp

Bank of America

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bank of America are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental indicators, Bank of America is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Fidus Investment Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fidus Investment Corp are ranked lower than 15 (%) 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 September 2025.

Pair Trading with Bank of America and Fidus Investment

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

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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.