Correlation Between Gladstone Investment and Prospect Capital
Can any of the company-specific risk be diversified away by investing in both Gladstone Investment and Prospect 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 Prospect 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 Prospect Capital, you can compare the effects of market volatilities on Gladstone Investment and Prospect 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 Prospect Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gladstone Investment and Prospect Capital.
Diversification Opportunities for Gladstone Investment and Prospect Capital
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Gladstone and Prospect is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Gladstone Investment and Prospect Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prospect 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 Prospect Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prospect Capital has no effect on the direction of Gladstone Investment i.e., Gladstone Investment and Prospect Capital go up and down completely randomly.
Pair Corralation between Gladstone Investment and Prospect Capital
Assuming the 90 days horizon Gladstone Investment is expected to generate 0.16 times more return on investment than Prospect Capital. However, Gladstone Investment is 6.32 times less risky than Prospect Capital. It trades about 0.03 of its potential returns per unit of risk. Prospect Capital is currently generating about -0.07 per unit of risk. If you would invest 2,451 in Gladstone Investment on August 28, 2024 and sell it today you would earn a total of 4.00 from holding Gladstone Investment or generate 0.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gladstone Investment vs. Prospect Capital
Performance |
| Timeline |
| Gladstone Investment |
| Prospect Capital |
Gladstone Investment and Prospect Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gladstone Investment and Prospect Capital
The main advantage of trading using opposite Gladstone Investment and Prospect Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gladstone Investment position performs unexpectedly, Prospect 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 Prospect Capital will offset losses from the drop in Prospect Capital'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 |
| Prospect Capital vs. PennyMac Mortgage Investment | Prospect Capital vs. SiriusPoint | Prospect Capital vs. Telephone and Data | Prospect Capital vs. ARMOUR Residential REIT |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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