Correlation Between Gladstone Capital and General American
Can any of the company-specific risk be diversified away by investing in both Gladstone Capital and General American 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 General American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gladstone Capital and General American Investors, you can compare the effects of market volatilities on Gladstone Capital and General American 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 General American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gladstone Capital and General American.
Diversification Opportunities for Gladstone Capital and General American
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gladstone and General is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Gladstone Capital and General American Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General American Inv 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 General American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General American Inv has no effect on the direction of Gladstone Capital i.e., Gladstone Capital and General American go up and down completely randomly.
Pair Corralation between Gladstone Capital and General American
Given the investment horizon of 90 days Gladstone Capital is expected to generate 3.41 times more return on investment than General American. However, Gladstone Capital is 3.41 times more volatile than General American Investors. It trades about -0.09 of its potential returns per unit of risk. General American Investors is currently generating about -0.34 per unit of risk. 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 |
Gladstone Capital vs. General American Investors
Performance |
| Timeline |
| Gladstone Capital |
| General American Inv |
Gladstone Capital and General American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gladstone Capital and General American
The main advantage of trading using opposite Gladstone Capital and General American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gladstone Capital position performs unexpectedly, General American 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 General American will offset losses from the drop in General American'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 |
| General American vs. Blackrock Muniyield | General American vs. Allianzgi Equity Convertible | General American vs. MFS Investment Grade | General American vs. Eaton Vance National |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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