Correlation Between Gladstone Investment and Monroe Capital
Can any of the company-specific risk be diversified away by investing in both Gladstone Investment and Monroe 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 Monroe 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 Monroe Capital Corp, you can compare the effects of market volatilities on Gladstone Investment and Monroe 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 Monroe Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gladstone Investment and Monroe Capital.
Diversification Opportunities for Gladstone Investment and Monroe Capital
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gladstone and Monroe is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Gladstone Investment and Monroe Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monroe Capital Corp 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 Monroe Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monroe Capital Corp has no effect on the direction of Gladstone Investment i.e., Gladstone Investment and Monroe Capital go up and down completely randomly.
Pair Corralation between Gladstone Investment and Monroe Capital
Given the investment horizon of 90 days Gladstone Investment is expected to generate 3.04 times less return on investment than Monroe Capital. But when comparing it to its historical volatility, Gladstone Investment is 1.19 times less risky than Monroe Capital. It trades about 0.04 of its potential returns per unit of risk. Monroe Capital Corp is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 702.00 in Monroe Capital Corp on August 24, 2024 and sell it today you would earn a total of 142.00 from holding Monroe Capital Corp or generate 20.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gladstone Investment vs. Monroe Capital Corp
Performance |
| Timeline |
| Gladstone Investment |
| Monroe Capital Corp |
Gladstone Investment and Monroe Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gladstone Investment and Monroe Capital
The main advantage of trading using opposite Gladstone Investment and Monroe Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gladstone Investment position performs unexpectedly, Monroe 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 Monroe Capital will offset losses from the drop in Monroe 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 |
| Monroe Capital vs. WhiteHorse Finance | Monroe Capital vs. OFS Capital Corp | Monroe Capital vs. Fidus Investment Corp | Monroe Capital vs. BlackRock TCP Capital |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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