Correlation Between Moelis and Gladstone Capital
Can any of the company-specific risk be diversified away by investing in both Moelis and Gladstone Capital 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 Moelis and Gladstone Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Moelis Co and Gladstone Capital, you can compare the effects of market volatilities on Moelis and Gladstone Capital 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 Moelis with a short position of Gladstone Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Moelis and Gladstone Capital.
Diversification Opportunities for Moelis and Gladstone Capital
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Moelis and Gladstone is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Moelis Co and Gladstone Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gladstone Capital and Moelis 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 Moelis Co are associated (or correlated) with Gladstone Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gladstone Capital has no effect on the direction of Moelis i.e., Moelis and Gladstone Capital go up and down completely randomly.
Pair Corralation between Moelis and Gladstone Capital
Allowing for the 90-day total investment horizon Moelis Co is expected to generate 1.91 times more return on investment than Gladstone Capital. However, Moelis is 1.91 times more volatile than Gladstone Capital. It trades about 0.08 of its potential returns per unit of risk. Gladstone Capital is currently generating about 0.09 per unit of risk. If you would invest 3,693 in Moelis Co on August 27, 2024 and sell it today you would earn a total of 3,812 from holding Moelis Co or generate 103.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Moelis Co vs. Gladstone Capital
Performance |
| Timeline |
| Moelis |
| Gladstone Capital |
Moelis and Gladstone Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Moelis and Gladstone Capital
The main advantage of trading using opposite Moelis and Gladstone Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Moelis position performs unexpectedly, Gladstone Capital 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 Capital will offset losses from the drop in Gladstone Capital's long position.The idea behind Moelis Co and Gladstone Capital pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Gladstone Capital vs. Main Street Capital | Gladstone Capital vs. PennantPark Floating Rate | Gladstone Capital vs. Horizon Technology Finance | Gladstone Capital 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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