Correlation Between Gladstone Investment and Allianz SE

Can any of the company-specific risk be diversified away by investing in both Gladstone Investment and Allianz SE 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 Gladstone Investment and Allianz SE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gladstone Investment and Allianz SE VNA, you can compare the effects of market volatilities on Gladstone Investment and Allianz SE 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 Gladstone Investment with a short position of Allianz SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gladstone Investment and Allianz SE.

Diversification Opportunities for Gladstone Investment and Allianz SE

0.19

Correlation Coefficient

Gladstone Investment  Allianz SE

Average diversification

The 3 months correlation between Gladstone and Allianz is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Gladstone Investment and Allianz SE VNA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allianz SE VNA and Gladstone Investment 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 Gladstone Investment are associated (or correlated) with Allianz SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allianz SE VNA has no effect on the direction of Gladstone Investment i.e., Gladstone Investment and Allianz SE go up and down completely randomly.

Pair Corralation between Gladstone Investment and Allianz SE

Assuming the 90 days horizon Gladstone Investment is expected to generate 1.27 times less return on investment than Allianz SE. In addition to that, Gladstone Investment is 1.53 times more volatile than Allianz SE VNA. It trades about 0.05 of its total potential returns per unit of risk. Allianz SE VNA is currently generating about 0.1 per unit of volatility. If you would invest  19,749  in Allianz SE VNA on October 26, 2024 and sell it today you would earn a total of  11,141  from holding Allianz SE VNA or generate 56.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Gladstone Investment  vs.  Allianz SE VNA

Gladstone Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gladstone Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Gladstone Investment is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Allianz SE VNA

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Allianz SE VNA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Allianz SE is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Gladstone Investment and Allianz SE

The main advantage of trading using opposite Gladstone Investment and Allianz SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gladstone Investment position performs unexpectedly, Allianz SE 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 Allianz SE will offset losses from the drop in Allianz SE's long position.

The idea behind Gladstone Investment and Allianz SE VNA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .