Correlation Between Gladstone Investment and Dow
Can any of the company-specific risk be diversified away by investing in both Gladstone Investment and Dow 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 Gladstone Investment and Dow into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gladstone Investment and Dow Inc, you can compare the effects of market volatilities on Gladstone Investment and Dow 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 Gladstone Investment with a short position of Dow. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gladstone Investment and Dow.
Diversification Opportunities for Gladstone Investment and Dow
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Gladstone and Dow is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Gladstone Investment and Dow Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Inc and Gladstone 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 Gladstone Investment are associated (or correlated) with Dow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Inc has no effect on the direction of Gladstone Investment i.e., Gladstone Investment and Dow go up and down completely randomly.
Pair Corralation between Gladstone Investment and Dow
Assuming the 90 days horizon Gladstone Investment is expected to generate 1.03 times more return on investment than Dow. However, Gladstone Investment is 1.03 times more volatile than Dow Inc. It trades about 0.05 of its potential returns per unit of risk. Dow Inc is currently generating about -0.22 per unit of risk. If you would invest 1,278 in Gladstone Investment on October 9, 2024 and sell it today you would earn a total of 14.00 from holding Gladstone Investment or generate 1.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gladstone Investment vs. Dow Inc
Performance |
| Timeline |
| Gladstone Investment |
| Dow Inc |
Gladstone Investment and Dow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gladstone Investment and Dow
The main advantage of trading using opposite Gladstone Investment and Dow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gladstone Investment position performs unexpectedly, Dow 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 Dow will offset losses from the drop in Dow's long position.| Gladstone Investment vs. VITEC SOFTWARE GROUP | Gladstone Investment vs. ELECTRONIC ARTS | Gladstone Investment vs. UPDATE SOFTWARE | Gladstone Investment vs. CPU SOFTWAREHOUSE |
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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