Correlation Between Gladstone Investment and REDFLEX HOLDINGS
Can any of the company-specific risk be diversified away by investing in both Gladstone Investment and REDFLEX HOLDINGS 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 REDFLEX HOLDINGS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gladstone Investment and REDFLEX HOLDINGS LTD, you can compare the effects of market volatilities on Gladstone Investment and REDFLEX HOLDINGS 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 REDFLEX HOLDINGS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gladstone Investment and REDFLEX HOLDINGS.
Diversification Opportunities for Gladstone Investment and REDFLEX HOLDINGS
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Gladstone and REDFLEX is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Gladstone Investment and REDFLEX HOLDINGS LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REDFLEX HOLDINGS LTD 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 REDFLEX HOLDINGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REDFLEX HOLDINGS LTD has no effect on the direction of Gladstone Investment i.e., Gladstone Investment and REDFLEX HOLDINGS go up and down completely randomly.
Pair Corralation between Gladstone Investment and REDFLEX HOLDINGS
Assuming the 90 days horizon Gladstone Investment is expected to generate 34.28 times less return on investment than REDFLEX HOLDINGS. But when comparing it to its historical volatility, Gladstone Investment is 81.77 times less risky than REDFLEX HOLDINGS. It trades about 0.2 of its potential returns per unit of risk. REDFLEX HOLDINGS LTD is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2.74 in REDFLEX HOLDINGS LTD on November 3, 2024 and sell it today you would lose (0.04) from holding REDFLEX HOLDINGS LTD or give up 1.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gladstone Investment vs. REDFLEX HOLDINGS LTD
Performance |
| Timeline |
| Gladstone Investment |
| REDFLEX HOLDINGS LTD |
Gladstone Investment and REDFLEX HOLDINGS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gladstone Investment and REDFLEX HOLDINGS
The main advantage of trading using opposite Gladstone Investment and REDFLEX HOLDINGS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gladstone Investment position performs unexpectedly, REDFLEX HOLDINGS 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 REDFLEX HOLDINGS will offset losses from the drop in REDFLEX HOLDINGS'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 |
| REDFLEX HOLDINGS vs. Cementos Pacasmayo SAA | REDFLEX HOLDINGS vs. Alto Neuroscience, | REDFLEX HOLDINGS vs. Tritent International Agriculture | REDFLEX HOLDINGS vs. Spyre Therapeutics |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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