Correlation Between LANXESS Aktiengesellscha and Gladstone Investment
Can any of the company-specific risk be diversified away by investing in both LANXESS Aktiengesellscha 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 LANXESS Aktiengesellscha and Gladstone Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LANXESS Aktiengesellschaft and Gladstone Investment, you can compare the effects of market volatilities on LANXESS Aktiengesellscha 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 LANXESS Aktiengesellscha with a short position of Gladstone Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of LANXESS Aktiengesellscha and Gladstone Investment.
Diversification Opportunities for LANXESS Aktiengesellscha and Gladstone Investment
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between LANXESS and Gladstone is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding LANXESS Aktiengesellschaft and Gladstone Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gladstone Investment and LANXESS Aktiengesellscha 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 LANXESS Aktiengesellschaft 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 LANXESS Aktiengesellscha i.e., LANXESS Aktiengesellscha and Gladstone Investment go up and down completely randomly.
Pair Corralation between LANXESS Aktiengesellscha and Gladstone Investment
Assuming the 90 days horizon LANXESS Aktiengesellschaft is expected to under-perform the Gladstone Investment. In addition to that, LANXESS Aktiengesellscha is 1.46 times more volatile than Gladstone Investment. It trades about -0.2 of its total potential returns per unit of risk. Gladstone Investment is currently generating about 0.05 per unit of volatility. If you would invest 1,278 in Gladstone Investment on October 9, 2024 and sell it today you would earn a total of 14.00 from holding Gladstone Investment or generate 1.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LANXESS Aktiengesellschaft vs. Gladstone Investment
Performance |
| Timeline |
| LANXESS Aktiengesellscha |
| Gladstone Investment |
LANXESS Aktiengesellscha and Gladstone Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LANXESS Aktiengesellscha and Gladstone Investment
The main advantage of trading using opposite LANXESS Aktiengesellscha and Gladstone Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LANXESS Aktiengesellscha 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.| LANXESS Aktiengesellscha vs. Aya Gold Silver | LANXESS Aktiengesellscha vs. CLOVER HEALTH INV | LANXESS Aktiengesellscha vs. Wenzhou Kangning Hospital | LANXESS Aktiengesellscha vs. MAG SILVER |
| Gladstone Investment vs. VITEC SOFTWARE GROUP | Gladstone Investment vs. ELECTRONIC ARTS | Gladstone Investment vs. UPDATE SOFTWARE | Gladstone Investment vs. CPU SOFTWAREHOUSE |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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