Correlation Between Gladstone Investment and National Bank
Can any of the company-specific risk be diversified away by investing in both Gladstone Investment and National Bank 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 National Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gladstone Investment and National Bank Holdings, you can compare the effects of market volatilities on Gladstone Investment and National Bank 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 National Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gladstone Investment and National Bank.
Diversification Opportunities for Gladstone Investment and National Bank
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Gladstone and National is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Gladstone Investment and National Bank Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Bank Holdings 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 National Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Bank Holdings has no effect on the direction of Gladstone Investment i.e., Gladstone Investment and National Bank go up and down completely randomly.
Pair Corralation between Gladstone Investment and National Bank
Assuming the 90 days horizon Gladstone Investment is expected to generate 2.57 times less return on investment than National Bank. But when comparing it to its historical volatility, Gladstone Investment is 1.55 times less risky than National Bank. It trades about 0.1 of its potential returns per unit of risk. National Bank Holdings is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 4,014 in National Bank Holdings on September 2, 2024 and sell it today you would earn a total of 466.00 from holding National Bank Holdings or generate 11.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gladstone Investment vs. National Bank Holdings
Performance |
| Timeline |
| Gladstone Investment |
| National Bank Holdings |
Gladstone Investment and National Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gladstone Investment and National Bank
The main advantage of trading using opposite Gladstone Investment and National Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gladstone Investment position performs unexpectedly, National Bank 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 National Bank will offset losses from the drop in National Bank's long position.| Gladstone Investment vs. Plug Power | Gladstone Investment vs. The Bank of | Gladstone Investment vs. Knowles | Gladstone Investment vs. Onxeo SA |
| National Bank vs. Eagle Materials | National Bank vs. Plastic Omnium | National Bank vs. SANOK RUBBER ZY | National Bank vs. Mitsubishi Materials |
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 Managers module to screen money managers from public funds and ETFs managed around the world.
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