Correlation Between Gladstone Investment and VULCAN MATERIALS
Can any of the company-specific risk be diversified away by investing in both Gladstone Investment and VULCAN MATERIALS 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 VULCAN MATERIALS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gladstone Investment and VULCAN MATERIALS, you can compare the effects of market volatilities on Gladstone Investment and VULCAN MATERIALS 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 VULCAN MATERIALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gladstone Investment and VULCAN MATERIALS.
Diversification Opportunities for Gladstone Investment and VULCAN MATERIALS
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gladstone and VULCAN is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Gladstone Investment and VULCAN MATERIALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VULCAN MATERIALS 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 VULCAN MATERIALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VULCAN MATERIALS has no effect on the direction of Gladstone Investment i.e., Gladstone Investment and VULCAN MATERIALS go up and down completely randomly.
Pair Corralation between Gladstone Investment and VULCAN MATERIALS
Assuming the 90 days horizon Gladstone Investment is expected to generate 1.54 times more return on investment than VULCAN MATERIALS. However, Gladstone Investment is 1.54 times more volatile than VULCAN MATERIALS. It trades about 0.05 of its potential returns per unit of risk. VULCAN MATERIALS is currently generating about -0.07 per unit of risk. If you would invest 1,268 in Gladstone Investment on September 12, 2024 and sell it today you would earn a total of 18.00 from holding Gladstone Investment or generate 1.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gladstone Investment vs. VULCAN MATERIALS
Performance |
| Timeline |
| Gladstone Investment |
| VULCAN MATERIALS |
Gladstone Investment and VULCAN MATERIALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gladstone Investment and VULCAN MATERIALS
The main advantage of trading using opposite Gladstone Investment and VULCAN MATERIALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gladstone Investment position performs unexpectedly, VULCAN MATERIALS 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 VULCAN MATERIALS will offset losses from the drop in VULCAN MATERIALS's long position.| Gladstone Investment vs. Lyxor 1 | Gladstone Investment vs. Xtrackers ShortDAX | Gladstone Investment vs. Xtrackers LevDAX |
| VULCAN MATERIALS vs. Apple Inc | VULCAN MATERIALS vs. Apple Inc | VULCAN MATERIALS vs. Apple Inc | VULCAN MATERIALS vs. Apple Inc |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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