Correlation Between Gladstone Investment and Rheinmetall
Can any of the company-specific risk be diversified away by investing in both Gladstone Investment and Rheinmetall 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 Rheinmetall into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gladstone Investment and Rheinmetall AG, you can compare the effects of market volatilities on Gladstone Investment and Rheinmetall 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 Rheinmetall. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gladstone Investment and Rheinmetall.
Diversification Opportunities for Gladstone Investment and Rheinmetall
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Gladstone and Rheinmetall is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Gladstone Investment and Rheinmetall AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rheinmetall AG 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 Rheinmetall. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rheinmetall AG has no effect on the direction of Gladstone Investment i.e., Gladstone Investment and Rheinmetall go up and down completely randomly.
Pair Corralation between Gladstone Investment and Rheinmetall
Assuming the 90 days horizon Gladstone Investment is expected to under-perform the Rheinmetall. But the stock apears to be less risky and, when comparing its historical volatility, Gladstone Investment is 1.41 times less risky than Rheinmetall. The stock trades about -0.02 of its potential returns per unit of risk. The Rheinmetall AG is currently generating about 0.51 of returns per unit of risk over similar time horizon. If you would invest 61,480 in Rheinmetall AG on October 30, 2024 and sell it today you would earn a total of 10,680 from holding Rheinmetall AG or generate 17.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Gladstone Investment vs. Rheinmetall AG
Performance |
| Timeline |
| Gladstone Investment |
| Rheinmetall AG |
Gladstone Investment and Rheinmetall Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gladstone Investment and Rheinmetall
The main advantage of trading using opposite Gladstone Investment and Rheinmetall positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gladstone Investment position performs unexpectedly, Rheinmetall 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 Rheinmetall will offset losses from the drop in Rheinmetall's long position.| Gladstone Investment vs. GigaMedia | Gladstone Investment vs. WT OFFSHORE | Gladstone Investment vs. CNVISION MEDIA | Gladstone Investment vs. Seven West Media |
| Rheinmetall vs. Universal Health Realty | Rheinmetall vs. SPARTAN STORES | Rheinmetall vs. Caseys General Stores | Rheinmetall vs. Burlington Stores |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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