Correlation Between Gladstone Investment and BOSTON BEER

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

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

Diversification Opportunities for Gladstone Investment and BOSTON BEER

0.24

Correlation Coefficient

Gladstone Investment  BOSTON BEER

Modest diversification

The 3 months correlation between Gladstone and BOSTON is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Gladstone Investment and BOSTON BEER A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BOSTON BEER A 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 BOSTON BEER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BOSTON BEER A has no effect on the direction of Gladstone Investment i.e., Gladstone Investment and BOSTON BEER go up and down completely randomly.

Pair Corralation between Gladstone Investment and BOSTON BEER

Assuming the 90 days horizon Gladstone Investment is expected to generate 0.67 times more return on investment than BOSTON BEER. However, Gladstone Investment is 1.5 times less risky than BOSTON BEER. It trades about 0.0 of its potential returns per unit of risk. BOSTON BEER A is currently generating about -0.54 per unit of risk. If you would invest  1,289  in Gladstone Investment on October 22, 2024 and sell it today you would lose (1.00) from holding Gladstone Investment or give up 0.08% of portfolio value over 90 days.

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

Gladstone Investment  vs.  BOSTON BEER A

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.

BOSTON BEER A

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BOSTON BEER A has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Gladstone Investment and BOSTON BEER

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

The idea behind Gladstone Investment and BOSTON BEER A 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.