Correlation Between Gladstone Capital and RENN Fund
Can any of the company-specific risk be diversified away by investing in both Gladstone Capital and RENN Fund 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 RENN Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gladstone Capital and RENN Fund, you can compare the effects of market volatilities on Gladstone Capital and RENN Fund 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 RENN Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gladstone Capital and RENN Fund.
Diversification Opportunities for Gladstone Capital and RENN Fund
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gladstone and RENN is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Gladstone Capital and RENN Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RENN Fund 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 RENN Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RENN Fund has no effect on the direction of Gladstone Capital i.e., Gladstone Capital and RENN Fund go up and down completely randomly.
Pair Corralation between Gladstone Capital and RENN Fund
Given the investment horizon of 90 days Gladstone Capital is expected to generate 0.5 times more return on investment than RENN Fund. However, Gladstone Capital is 2.0 times less risky than RENN Fund. It trades about 0.1 of its potential returns per unit of risk. RENN Fund is currently generating about 0.05 per unit of risk. If you would invest 1,716 in Gladstone Capital on October 24, 2024 and sell it today you would earn a total of 1,298 from holding Gladstone Capital or generate 75.64% 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. RENN Fund
Performance |
| Timeline |
| Gladstone Capital |
| RENN Fund |
Gladstone Capital and RENN Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gladstone Capital and RENN Fund
The main advantage of trading using opposite Gladstone Capital and RENN Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gladstone Capital position performs unexpectedly, RENN Fund 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 RENN Fund will offset losses from the drop in RENN Fund's long position.| Gladstone Capital vs. Visa Class A | Gladstone Capital vs. Diamond Hill Investment | Gladstone Capital vs. Distoken Acquisition | Gladstone Capital vs. AllianceBernstein Holding LP |
| RENN Fund vs. Ellsworth Convertible Growth | RENN Fund vs. Delaware Investments Florida | RENN Fund vs. Nuveen New Jersey | RENN Fund vs. John Hancock Hedged |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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