Correlation Between Associated British and Gladstone Commercial
Can any of the company-specific risk be diversified away by investing in both Associated British and Gladstone Commercial 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 Associated British and Gladstone Commercial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Associated British Foods and Gladstone Commercial Corp, you can compare the effects of market volatilities on Associated British and Gladstone Commercial 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 Associated British with a short position of Gladstone Commercial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associated British and Gladstone Commercial.
Diversification Opportunities for Associated British and Gladstone Commercial
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Associated and Gladstone is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Associated British Foods and Gladstone Commercial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gladstone Commercial Corp and Associated British 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 Associated British Foods are associated (or correlated) with Gladstone Commercial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gladstone Commercial Corp has no effect on the direction of Associated British i.e., Associated British and Gladstone Commercial go up and down completely randomly.
Pair Corralation between Associated British and Gladstone Commercial
Assuming the 90 days trading horizon Associated British Foods is expected to under-perform the Gladstone Commercial. But the stock apears to be less risky and, when comparing its historical volatility, Associated British Foods is 1.45 times less risky than Gladstone Commercial. The stock trades about -0.07 of its potential returns per unit of risk. The Gladstone Commercial Corp is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 1,589 in Gladstone Commercial Corp on September 4, 2024 and sell it today you would earn a total of 165.00 from holding Gladstone Commercial Corp or generate 10.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 90.91% |
| Values | Daily Returns |
Associated British Foods vs. Gladstone Commercial Corp
Performance |
| Timeline |
| Associated British Foods |
| Gladstone Commercial Corp |
Associated British and Gladstone Commercial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Associated British and Gladstone Commercial
The main advantage of trading using opposite Associated British and Gladstone Commercial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Associated British position performs unexpectedly, Gladstone Commercial 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 Gladstone Commercial will offset losses from the drop in Gladstone Commercial's long position.| Associated British vs. Samsung Electronics Co | Associated British vs. Samsung Electronics Co | Associated British vs. Hyundai Motor | Associated British vs. Toyota Motor Corp |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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