Correlation Between Gladstone Capital and Gladstone Investment
Can any of the company-specific risk be diversified away by investing in both Gladstone Capital 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 Gladstone Capital and Gladstone Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gladstone Capital and Gladstone Investment, you can compare the effects of market volatilities on Gladstone Capital 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 Gladstone Capital with a short position of Gladstone Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gladstone Capital and Gladstone Investment.
Diversification Opportunities for Gladstone Capital and Gladstone Investment
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gladstone and Gladstone is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Gladstone Capital and Gladstone Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gladstone Investment and Gladstone Capital 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 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 Gladstone Capital i.e., Gladstone Capital and Gladstone Investment go up and down completely randomly.
Pair Corralation between Gladstone Capital and Gladstone Investment
Given the investment horizon of 90 days Gladstone Capital is expected to generate 0.93 times more return on investment than Gladstone Investment. However, Gladstone Capital is 1.07 times less risky than Gladstone Investment. It trades about 0.14 of its potential returns per unit of risk. Gladstone Investment is currently generating about 0.04 per unit of risk. If you would invest 1,863 in Gladstone Capital on August 26, 2024 and sell it today you would earn a total of 808.00 from holding Gladstone Capital or generate 43.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gladstone Capital vs. Gladstone Investment
Performance |
| Timeline |
| Gladstone Capital |
| Gladstone Investment |
Gladstone Capital and Gladstone Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gladstone Capital and Gladstone Investment
The main advantage of trading using opposite Gladstone Capital and Gladstone Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gladstone Capital 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.| Gladstone Capital vs. Main Street Capital | Gladstone Capital vs. PennantPark Floating Rate | Gladstone Capital vs. Horizon Technology Finance | Gladstone Capital vs. Prospect Capital |
| Gladstone Investment vs. PennantPark Floating Rate | Gladstone Investment vs. Horizon Technology Finance | Gladstone Investment vs. Stellus Capital Investment | Gladstone Investment 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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