Correlation Between Customers Bancorp and Gladstone Investment
Can any of the company-specific risk be diversified away by investing in both Customers Bancorp and Gladstone Investment 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 Customers Bancorp and Gladstone Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Customers Bancorp and Gladstone Investment, you can compare the effects of market volatilities on Customers Bancorp and Gladstone Investment 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 Customers Bancorp with a short position of Gladstone Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Customers Bancorp and Gladstone Investment.
Diversification Opportunities for Customers Bancorp and Gladstone Investment
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Customers and Gladstone is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Customers Bancorp and Gladstone Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gladstone Investment and Customers Bancorp 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 Customers Bancorp are associated (or correlated) with Gladstone Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gladstone Investment has no effect on the direction of Customers Bancorp i.e., Customers Bancorp and Gladstone Investment go up and down completely randomly.
Pair Corralation between Customers Bancorp and Gladstone Investment
Given the investment horizon of 90 days Customers Bancorp is expected to under-perform the Gladstone Investment. In addition to that, Customers Bancorp is 6.48 times more volatile than Gladstone Investment. It trades about -0.08 of its total potential returns per unit of risk. Gladstone Investment is currently generating about 0.18 per unit of volatility. If you would invest 2,440 in Gladstone Investment on September 1, 2024 and sell it today you would earn a total of 26.00 from holding Gladstone Investment or generate 1.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Customers Bancorp vs. Gladstone Investment
Performance |
| Timeline |
| Customers Bancorp |
| Gladstone Investment |
Customers Bancorp and Gladstone Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Customers Bancorp and Gladstone Investment
The main advantage of trading using opposite Customers Bancorp and Gladstone Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Customers Bancorp position performs unexpectedly, Gladstone Investment 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 Investment will offset losses from the drop in Gladstone Investment's long position.| Customers Bancorp vs. CMS Energy Corp | Customers Bancorp vs. CMS Energy Corp | Customers Bancorp vs. American Financial Group | Customers Bancorp vs. Eagle Point Credit |
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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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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