Correlation Between Gladstone Investment and Koninklijke Ahold
Can any of the company-specific risk be diversified away by investing in both Gladstone Investment and Koninklijke Ahold 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 Koninklijke Ahold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gladstone Investment and Koninklijke Ahold Delhaize, you can compare the effects of market volatilities on Gladstone Investment and Koninklijke Ahold 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 Koninklijke Ahold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gladstone Investment and Koninklijke Ahold.
Diversification Opportunities for Gladstone Investment and Koninklijke Ahold
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Gladstone and Koninklijke is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Gladstone Investment and Koninklijke Ahold Delhaize in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Koninklijke Ahold 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 Koninklijke Ahold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Koninklijke Ahold has no effect on the direction of Gladstone Investment i.e., Gladstone Investment and Koninklijke Ahold go up and down completely randomly.
Pair Corralation between Gladstone Investment and Koninklijke Ahold
Assuming the 90 days horizon Gladstone Investment is expected to generate 1.36 times more return on investment than Koninklijke Ahold. However, Gladstone Investment is 1.36 times more volatile than Koninklijke Ahold Delhaize. It trades about 0.06 of its potential returns per unit of risk. Koninklijke Ahold Delhaize is currently generating about 0.04 per unit of risk. If you would invest 879.00 in Gladstone Investment on September 14, 2024 and sell it today you would earn a total of 423.00 from holding Gladstone Investment or generate 48.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gladstone Investment vs. Koninklijke Ahold Delhaize
Performance |
| Timeline |
| Gladstone Investment |
| Koninklijke Ahold |
Gladstone Investment and Koninklijke Ahold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gladstone Investment and Koninklijke Ahold
The main advantage of trading using opposite Gladstone Investment and Koninklijke Ahold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gladstone Investment position performs unexpectedly, Koninklijke Ahold 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 Koninklijke Ahold will offset losses from the drop in Koninklijke Ahold's long position.| Gladstone Investment vs. Lyxor 1 | Gladstone Investment vs. Xtrackers ShortDAX | Gladstone Investment vs. Xtrackers LevDAX |
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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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