Correlation Between Standard Life and Gladstone Capital
Can any of the company-specific risk be diversified away by investing in both Standard Life 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 Standard Life and Gladstone Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Standard Life Aberdeen and Gladstone Capital, you can compare the effects of market volatilities on Standard Life 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 Standard Life with a short position of Gladstone Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Standard Life and Gladstone Capital.
Diversification Opportunities for Standard Life and Gladstone Capital
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Standard and Gladstone is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Standard Life Aberdeen and Gladstone Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gladstone Capital and Standard Life 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 Standard Life Aberdeen 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 Standard Life i.e., Standard Life and Gladstone Capital go up and down completely randomly.
Pair Corralation between Standard Life and Gladstone Capital
Assuming the 90 days horizon Standard Life Aberdeen is expected to generate 0.85 times more return on investment than Gladstone Capital. However, Standard Life Aberdeen is 1.17 times less risky than Gladstone Capital. It trades about 0.22 of its potential returns per unit of risk. Gladstone Capital is currently generating about -0.09 per unit of risk. If you would invest 754.00 in Standard Life Aberdeen on December 1, 2024 and sell it today you would earn a total of 34.00 from holding Standard Life Aberdeen or generate 4.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Standard Life Aberdeen vs. Gladstone Capital
Performance |
| Timeline |
| Standard Life Aberdeen |
| Gladstone Capital |
Standard Life and Gladstone Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Standard Life and Gladstone Capital
The main advantage of trading using opposite Standard Life and Gladstone Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Standard Life 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.| Standard Life vs. Tri Continental Closed | Standard Life vs. Adams Natural Resources | Standard Life vs. Adams Diversified Equity | Standard Life vs. Schroders PLC |
| 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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