Correlation Between General American and Gladstone Capital
Can any of the company-specific risk be diversified away by investing in both General American and Gladstone 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 General American and Gladstone Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General American Investors and Gladstone Capital, you can compare the effects of market volatilities on General American and Gladstone 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 General American with a short position of Gladstone Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of General American and Gladstone Capital.
Diversification Opportunities for General American and Gladstone Capital
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between General and Gladstone is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding General American Investors and Gladstone Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gladstone Capital and General American 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 General American Investors are associated (or correlated) with Gladstone Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gladstone Capital has no effect on the direction of General American i.e., General American and Gladstone Capital go up and down completely randomly.
Pair Corralation between General American and Gladstone Capital
Considering the 90-day investment horizon General American Investors is expected to under-perform the Gladstone Capital. But the stock apears to be less risky and, when comparing its historical volatility, General American Investors is 3.41 times less risky than Gladstone Capital. The stock trades about -0.34 of its potential returns per unit of risk. The Gladstone Capital is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 2,952 in Gladstone Capital on December 1, 2024 and sell it today you would lose (64.00) from holding Gladstone Capital or give up 2.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General American Investors vs. Gladstone Capital
Performance |
| Timeline |
| General American Inv |
| Gladstone Capital |
General American and Gladstone Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with General American and Gladstone Capital
The main advantage of trading using opposite General American and Gladstone Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General American position performs unexpectedly, Gladstone 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 Gladstone Capital will offset losses from the drop in Gladstone Capital's long position.| General American vs. Blackrock Muniyield | General American vs. Allianzgi Equity Convertible | General American vs. MFS Investment Grade | General American vs. Eaton Vance National |
| Gladstone Capital vs. Main Street Capital | Gladstone Capital vs. PennantPark Floating Rate | Gladstone Capital vs. Horizon Technology Finance | Gladstone Capital vs. Prospect 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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