Correlation Between Great Elm and Gladstone Investment
Can any of the company-specific risk be diversified away by investing in both Great Elm and Gladstone Investment 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 Great Elm and Gladstone Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great Elm Capital and Gladstone Investment, you can compare the effects of market volatilities on Great Elm and Gladstone Investment 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 Great Elm with a short position of Gladstone Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Elm and Gladstone Investment.
Diversification Opportunities for Great Elm and Gladstone Investment
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Great and Gladstone is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Great Elm Capital and Gladstone Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gladstone Investment and Great Elm 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 Great Elm Capital are associated (or correlated) with Gladstone Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gladstone Investment has no effect on the direction of Great Elm i.e., Great Elm and Gladstone Investment go up and down completely randomly.
Pair Corralation between Great Elm and Gladstone Investment
Assuming the 90 days horizon Great Elm Capital is expected to under-perform the Gladstone Investment. But the stock apears to be less risky and, when comparing its historical volatility, Great Elm Capital is 2.73 times less risky than Gladstone Investment. The stock trades about -0.1 of its potential returns per unit of risk. The Gladstone Investment is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,323 in Gladstone Investment on September 2, 2024 and sell it today you would earn a total of 23.00 from holding Gladstone Investment or generate 0.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Great Elm Capital vs. Gladstone Investment
Performance |
| Timeline |
| Great Elm Capital |
| Gladstone Investment |
Great Elm and Gladstone Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great Elm and Gladstone Investment
The main advantage of trading using opposite Great Elm and Gladstone Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great Elm position performs unexpectedly, Gladstone Investment 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 Investment will offset losses from the drop in Gladstone Investment's long position.The idea behind Great Elm Capital and Gladstone Investment pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Gladstone Investment vs. Atlanticus Holdings | Gladstone Investment vs. Great Elm Capital | Gladstone Investment vs. Aquagold International | Gladstone Investment vs. Thrivent High Yield |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges |