Correlation Between Adams Natural and Gladstone Capital
Can any of the company-specific risk be diversified away by investing in both Adams Natural 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 Adams Natural and Gladstone Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adams Natural Resources and Gladstone Capital, you can compare the effects of market volatilities on Adams Natural 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 Adams Natural with a short position of Gladstone Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adams Natural and Gladstone Capital.
Diversification Opportunities for Adams Natural and Gladstone Capital
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Adams and Gladstone is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Adams Natural Resources and Gladstone Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gladstone Capital and Adams Natural 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 Adams Natural Resources 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 Adams Natural i.e., Adams Natural and Gladstone Capital go up and down completely randomly.
Pair Corralation between Adams Natural and Gladstone Capital
Considering the 90-day investment horizon Adams Natural Resources is expected to generate 1.0 times more return on investment than Gladstone Capital. However, Adams Natural is 1.0 times more volatile than Gladstone Capital. It trades about 0.01 of its potential returns per unit of risk. Gladstone Capital is currently generating about -0.09 per unit of risk. If you would invest 2,228 in Adams Natural Resources on December 1, 2024 and sell it today you would earn a total of 5.00 from holding Adams Natural Resources or generate 0.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Adams Natural Resources vs. Gladstone Capital
Performance |
| Timeline |
| Adams Natural Resources |
| Gladstone Capital |
Adams Natural and Gladstone Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adams Natural and Gladstone Capital
The main advantage of trading using opposite Adams Natural and Gladstone Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adams Natural 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.| Adams Natural vs. Liberty All Star | Adams Natural vs. Tri Continental Closed | Adams Natural vs. Royce Value Closed | Adams Natural vs. Central Securities |
| 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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