Correlation Between Gladstone Investment and AURELIUS Equity

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

By analyzing existing cross correlation between Gladstone Investment and AURELIUS Equity Opportunities, you can compare the effects of market volatilities on Gladstone Investment and AURELIUS Equity 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 AURELIUS Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gladstone Investment and AURELIUS Equity.

Diversification Opportunities for Gladstone Investment and AURELIUS Equity

0.29

Correlation Coefficient

Gladstone Investment  AURELIUS Equity

Modest diversification

The 3 months correlation between Gladstone and AURELIUS is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Gladstone Investment and AURELIUS Equity Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AURELIUS Equity Oppo 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 AURELIUS Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AURELIUS Equity Oppo has no effect on the direction of Gladstone Investment i.e., Gladstone Investment and AURELIUS Equity go up and down completely randomly.

Pair Corralation between Gladstone Investment and AURELIUS Equity

Assuming the 90 days horizon Gladstone Investment is expected to generate 14.27 times less return on investment than AURELIUS Equity. But when comparing it to its historical volatility, Gladstone Investment is 14.74 times less risky than AURELIUS Equity. It trades about 0.05 of its potential returns per unit of risk. AURELIUS Equity Opportunities is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,501  in AURELIUS Equity Opportunities on October 25, 2024 and sell it today you would earn a total of  6,659  from holding AURELIUS Equity Opportunities or generate 443.64% return on investment over 90 days.

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

Gladstone Investment  vs.  AURELIUS Equity Opportunities

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.

AURELIUS Equity Oppo

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AURELIUS Equity Opportunities are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, AURELIUS Equity unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gladstone Investment and AURELIUS Equity

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

The idea behind Gladstone Investment and AURELIUS Equity Opportunities 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.