Correlation Between Fidus Investment and Goldman Sachs

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

Diversification Opportunities for Fidus Investment and Goldman Sachs

-0.29

Correlation Coefficient

Fidus Investment  Goldman Sachs

Very good diversification

The 3 months correlation between Fidus and Goldman is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Fidus Investment Corp and Goldman Sachs BDC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs BDC 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 Goldman Sachs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldman Sachs BDC has no effect on the direction of Fidus Investment i.e., Fidus Investment and Goldman Sachs go up and down completely randomly.

Pair Corralation between Fidus Investment and Goldman Sachs

Given the investment horizon of 90 days Fidus Investment Corp is expected to generate 0.78 times more return on investment than Goldman Sachs. However, Fidus Investment Corp is 1.28 times less risky than Goldman Sachs. It trades about -0.09 of its potential returns per unit of risk. Goldman Sachs BDC is currently generating about -0.18 per unit of risk. If you would invest  1,976  in Fidus Investment Corp on July 18, 2024 and sell it today you would lose (22.00) from holding Fidus Investment Corp or give up 1.11% of portfolio value over 90 days.

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

Fidus Investment Corp  vs.  Goldman Sachs BDC

Fidus Investment Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fidus Investment Corp are ranked lower than 4 (%) 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 recent stock price uproar, may contribute to short-horizon losses for the private investors.

Goldman Sachs BDC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goldman Sachs BDC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's fundamental drivers remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Fidus Investment and Goldman Sachs

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

The idea behind Fidus Investment Corp and Goldman Sachs BDC 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.