Correlation Between Gladstone Investment and Dynex Capital
Can any of the company-specific risk be diversified away by investing in both Gladstone Investment and Dynex 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 Dynex 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 Dynex Capital, you can compare the effects of market volatilities on Gladstone Investment and Dynex 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 Dynex Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gladstone Investment and Dynex Capital.
Diversification Opportunities for Gladstone Investment and Dynex Capital
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Gladstone and Dynex is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Gladstone Investment and Dynex Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynex 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 Dynex Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dynex Capital has no effect on the direction of Gladstone Investment i.e., Gladstone Investment and Dynex Capital go up and down completely randomly.
Pair Corralation between Gladstone Investment and Dynex Capital
Given the investment horizon of 90 days Gladstone Investment is expected to under-perform the Dynex Capital. In addition to that, Gladstone Investment is 1.49 times more volatile than Dynex Capital. It trades about -0.09 of its total potential returns per unit of risk. Dynex Capital is currently generating about 0.06 per unit of volatility. If you would invest 1,234 in Dynex Capital on August 23, 2024 and sell it today you would earn a total of 15.00 from holding Dynex Capital or generate 1.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gladstone Investment vs. Dynex Capital
Performance |
| Timeline |
| Gladstone Investment |
| Dynex Capital |
Gladstone Investment and Dynex Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gladstone Investment and Dynex Capital
The main advantage of trading using opposite Gladstone Investment and Dynex Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gladstone Investment position performs unexpectedly, Dynex 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 Dynex Capital will offset losses from the drop in Dynex 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 |
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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