Correlation Between Gladstone Investment and Ares Capital
Can any of the company-specific risk be diversified away by investing in both Gladstone Investment and Ares Capital 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 Ares Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gladstone Investment and Ares Capital, you can compare the effects of market volatilities on Gladstone Investment and Ares Capital 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 Ares Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gladstone Investment and Ares Capital.
Diversification Opportunities for Gladstone Investment and Ares Capital
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Gladstone and Ares is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Gladstone Investment and Ares Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ares Capital 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 Ares Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ares Capital has no effect on the direction of Gladstone Investment i.e., Gladstone Investment and Ares Capital go up and down completely randomly.
Pair Corralation between Gladstone Investment and Ares Capital
Given the investment horizon of 90 days Gladstone Investment is expected to generate 1.22 times less return on investment than Ares Capital. In addition to that, Gladstone Investment is 1.37 times more volatile than Ares Capital. It trades about 0.05 of its total potential returns per unit of risk. Ares Capital is currently generating about 0.08 per unit of volatility. If you would invest 1,593 in Ares Capital on November 9, 2024 and sell it today you would earn a total of 680.00 from holding Ares Capital or generate 42.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gladstone Investment vs. Ares Capital
Performance |
| Timeline |
| Gladstone Investment |
| Ares Capital |
Gladstone Investment and Ares Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gladstone Investment and Ares Capital
The main advantage of trading using opposite Gladstone Investment and Ares Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gladstone Investment position performs unexpectedly, Ares Capital 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 Ares Capital will offset losses from the drop in Ares Capital's long position.| Gladstone Investment vs. PennantPark Floating Rate | Gladstone Investment vs. Horizon Technology Finance | Gladstone Investment vs. Stellus Capital Investment | Gladstone Investment vs. Prospect Capital |
| Ares Capital vs. Triplepoint Venture Growth | Ares Capital vs. Sixth Street Specialty | Ares Capital vs. Main Street Capital | Ares Capital vs. Capital Southwest |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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