Correlation Between EDISON INTL and Gladstone Investment
Can any of the company-specific risk be diversified away by investing in both EDISON INTL 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 EDISON INTL and Gladstone Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EDISON INTL and Gladstone Investment, you can compare the effects of market volatilities on EDISON INTL 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 EDISON INTL with a short position of Gladstone Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of EDISON INTL and Gladstone Investment.
Diversification Opportunities for EDISON INTL and Gladstone Investment
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between EDISON and Gladstone is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding EDISON INTL and Gladstone Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gladstone Investment and EDISON INTL 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 EDISON INTL 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 EDISON INTL i.e., EDISON INTL and Gladstone Investment go up and down completely randomly.
Pair Corralation between EDISON INTL and Gladstone Investment
Assuming the 90 days trading horizon EDISON INTL is expected to generate 0.73 times more return on investment than Gladstone Investment. However, EDISON INTL is 1.38 times less risky than Gladstone Investment. It trades about 0.38 of its potential returns per unit of risk. Gladstone Investment is currently generating about 0.15 per unit of risk. If you would invest 7,392 in EDISON INTL on September 3, 2024 and sell it today you would earn a total of 922.00 from holding EDISON INTL or generate 12.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
EDISON INTL vs. Gladstone Investment
Performance |
| Timeline |
| EDISON INTL |
| Gladstone Investment |
EDISON INTL and Gladstone Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EDISON INTL and Gladstone Investment
The main advantage of trading using opposite EDISON INTL and Gladstone Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EDISON INTL 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.| EDISON INTL vs. SEI INVESTMENTS | EDISON INTL vs. Gladstone Investment | EDISON INTL vs. Westlake Chemical | EDISON INTL vs. Japan Asia Investment |
| Gladstone Investment vs. Perseus Mining Limited | Gladstone Investment vs. Sunstone Hotel Investors | Gladstone Investment vs. GRIFFIN MINING LTD | Gladstone Investment vs. Playa Hotels Resorts |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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