Correlation Between Gladstone Capital and Adams Natural
Can any of the company-specific risk be diversified away by investing in both Gladstone Capital and Adams Natural 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 Adams Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gladstone Capital and Adams Natural Resources, you can compare the effects of market volatilities on Gladstone Capital and Adams Natural 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 Adams Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gladstone Capital and Adams Natural.
Diversification Opportunities for Gladstone Capital and Adams Natural
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Gladstone and Adams is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Gladstone Capital and Adams Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adams Natural Resources 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 Adams Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adams Natural Resources has no effect on the direction of Gladstone Capital i.e., Gladstone Capital and Adams Natural go up and down completely randomly.
Pair Corralation between Gladstone Capital and Adams Natural
Given the investment horizon of 90 days Gladstone Capital is expected to generate 1.01 times more return on investment than Adams Natural. However, Gladstone Capital is 1.01 times more volatile than Adams Natural Resources. It trades about 0.1 of its potential returns per unit of risk. Adams Natural Resources is currently generating about 0.04 per unit of risk. If you would invest 1,703 in Gladstone Capital on September 3, 2024 and sell it today you would earn a total of 1,086 from holding Gladstone Capital or generate 63.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gladstone Capital vs. Adams Natural Resources
Performance |
| Timeline |
| Gladstone Capital |
| Adams Natural Resources |
Gladstone Capital and Adams Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gladstone Capital and Adams Natural
The main advantage of trading using opposite Gladstone Capital and Adams Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gladstone Capital position performs unexpectedly, Adams Natural 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 Adams Natural will offset losses from the drop in Adams Natural'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 |
| Adams Natural vs. Liberty All Star | Adams Natural vs. Tri Continental Closed | Adams Natural vs. Royce Value Closed | Adams Natural vs. Central Securities |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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