Correlation Between Gladstone Investment and NorthWestern
Can any of the company-specific risk be diversified away by investing in both Gladstone Investment and NorthWestern 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 NorthWestern into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gladstone Investment and NorthWestern, you can compare the effects of market volatilities on Gladstone Investment and NorthWestern 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 NorthWestern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gladstone Investment and NorthWestern.
Diversification Opportunities for Gladstone Investment and NorthWestern
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Gladstone and NorthWestern is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Gladstone Investment and NorthWestern in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NorthWestern 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 NorthWestern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NorthWestern has no effect on the direction of Gladstone Investment i.e., Gladstone Investment and NorthWestern go up and down completely randomly.
Pair Corralation between Gladstone Investment and NorthWestern
Assuming the 90 days horizon Gladstone Investment is expected to generate 0.29 times more return on investment than NorthWestern. However, Gladstone Investment is 3.5 times less risky than NorthWestern. It trades about 0.08 of its potential returns per unit of risk. NorthWestern is currently generating about 0.02 per unit of risk. If you would invest 2,386 in Gladstone Investment on November 2, 2024 and sell it today you would earn a total of 76.00 from holding Gladstone Investment or generate 3.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gladstone Investment vs. NorthWestern
Performance |
| Timeline |
| Gladstone Investment |
| NorthWestern |
Gladstone Investment and NorthWestern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gladstone Investment and NorthWestern
The main advantage of trading using opposite Gladstone Investment and NorthWestern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gladstone Investment position performs unexpectedly, NorthWestern 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 NorthWestern will offset losses from the drop in NorthWestern's long position.| Gladstone Investment vs. Newtek Business Services | Gladstone Investment vs. Oxford Lane Capital | Gladstone Investment vs. Gladstone Investment | Gladstone Investment vs. Gladstone Commercial Corp |
| NorthWestern vs. Allete Inc | NorthWestern vs. Black Hills | NorthWestern vs. Otter Tail | NorthWestern vs. Avista |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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