Correlation Between Tri Continental and Gladstone Capital
Can any of the company-specific risk be diversified away by investing in both Tri Continental 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 Tri Continental and Gladstone Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tri Continental Closed and Gladstone Capital, you can compare the effects of market volatilities on Tri Continental 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 Tri Continental with a short position of Gladstone Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tri Continental and Gladstone Capital.
Diversification Opportunities for Tri Continental and Gladstone Capital
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Tri and Gladstone is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Tri Continental Closed and Gladstone Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gladstone Capital and Tri Continental 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 Tri Continental Closed 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 Tri Continental i.e., Tri Continental and Gladstone Capital go up and down completely randomly.
Pair Corralation between Tri Continental and Gladstone Capital
Allowing for the 90-day total investment horizon Tri Continental is expected to generate 2.83 times less return on investment than Gladstone Capital. But when comparing it to its historical volatility, Tri Continental Closed is 1.56 times less risky than Gladstone Capital. It trades about 0.36 of its potential returns per unit of risk. Gladstone Capital is currently generating about 0.66 of returns per unit of risk over similar time horizon. If you would invest 2,409 in Gladstone Capital on September 1, 2024 and sell it today you would earn a total of 380.00 from holding Gladstone Capital or generate 15.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tri Continental Closed vs. Gladstone Capital
Performance |
| Timeline |
| Tri Continental Closed |
| Gladstone Capital |
Tri Continental and Gladstone Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tri Continental and Gladstone Capital
The main advantage of trading using opposite Tri Continental and Gladstone Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tri Continental 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.| Tri Continental vs. Eaton Vance Tax | Tri Continental vs. Blackrock Muniyield | Tri Continental vs. Eaton Vance Tax | Tri Continental vs. Eaton Vance Tax |
| 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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