Correlation Between State Street and Gladstone Investment
Can any of the company-specific risk be diversified away by investing in both State Street 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 State Street and Gladstone Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between State Street and Gladstone Investment, you can compare the effects of market volatilities on State Street 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 State Street with a short position of Gladstone Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Street and Gladstone Investment.
Diversification Opportunities for State Street and Gladstone Investment
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between State and Gladstone is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding State Street and Gladstone Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gladstone Investment and State Street 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 State Street 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 State Street i.e., State Street and Gladstone Investment go up and down completely randomly.
Pair Corralation between State Street and Gladstone Investment
Assuming the 90 days trading horizon State Street is expected to generate 1.71 times less return on investment than Gladstone Investment. In addition to that, State Street is 1.11 times more volatile than Gladstone Investment. It trades about 0.03 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 2,070 in Gladstone Investment on August 27, 2024 and sell it today you would earn a total of 385.00 from holding Gladstone Investment or generate 18.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
State Street vs. Gladstone Investment
Performance |
| Timeline |
| State Street |
| Gladstone Investment |
State Street and Gladstone Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Street and Gladstone Investment
The main advantage of trading using opposite State Street and Gladstone Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Street 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.| State Street vs. The Gabelli Equity | State Street vs. The Gabelli Multimedia | State Street vs. The Gabelli Equity | State Street vs. Virtus AllianzGI Convertible |
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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