Correlation Between New Mountain and Gladstone Capital
Can any of the company-specific risk be diversified away by investing in both New Mountain 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 New Mountain and Gladstone Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Mountain Finance and Gladstone Capital, you can compare the effects of market volatilities on New Mountain 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 New Mountain with a short position of Gladstone Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Mountain and Gladstone Capital.
Diversification Opportunities for New Mountain and Gladstone Capital
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between New and Gladstone is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding New Mountain Finance and Gladstone Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gladstone Capital and New Mountain 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 New Mountain Finance 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 New Mountain i.e., New Mountain and Gladstone Capital go up and down completely randomly.
Pair Corralation between New Mountain and Gladstone Capital
Given the investment horizon of 90 days New Mountain Finance is expected to under-perform the Gladstone Capital. But the stock apears to be less risky and, when comparing its historical volatility, New Mountain Finance is 1.43 times less risky than Gladstone Capital. The stock trades about -0.04 of its potential returns per unit of risk. The Gladstone Capital is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 2,133 in Gladstone Capital on August 24, 2024 and sell it today you would earn a total of 518.00 from holding Gladstone Capital or generate 24.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Mountain Finance vs. Gladstone Capital
Performance |
| Timeline |
| New Mountain Finance |
| Gladstone Capital |
New Mountain and Gladstone Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Mountain and Gladstone Capital
The main advantage of trading using opposite New Mountain and Gladstone Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Mountain 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.| New Mountain vs. BlackRock TCP Capital | New Mountain vs. Carlyle Secured Lending | New Mountain vs. Sixth Street Specialty | New Mountain vs. WhiteHorse Finance |
| 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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