Correlation Between Gladstone Investment and ESSILORLUXOTTICA

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

By analyzing existing cross correlation between Gladstone Investment and ESSILORLUXOTTICA 12ON, you can compare the effects of market volatilities on Gladstone Investment and ESSILORLUXOTTICA 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 ESSILORLUXOTTICA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gladstone Investment and ESSILORLUXOTTICA.

Diversification Opportunities for Gladstone Investment and ESSILORLUXOTTICA

0.05

Correlation Coefficient

Gladstone Investment  ESSILORLUXOTTICA

Significant diversification

The 3 months correlation between Gladstone and ESSILORLUXOTTICA is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Gladstone Investment and ESSILORLUXOTTICA 12ON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ESSILORLUXOTTICA 12ON 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 ESSILORLUXOTTICA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ESSILORLUXOTTICA 12ON has no effect on the direction of Gladstone Investment i.e., Gladstone Investment and ESSILORLUXOTTICA go up and down completely randomly.

Pair Corralation between Gladstone Investment and ESSILORLUXOTTICA

Assuming the 90 days horizon Gladstone Investment is expected to generate 130.1 times less return on investment than ESSILORLUXOTTICA. In addition to that, Gladstone Investment is 1.36 times more volatile than ESSILORLUXOTTICA 12ON. It trades about 0.0 of its total potential returns per unit of risk. ESSILORLUXOTTICA 12ON is currently generating about 0.4 per unit of volatility. If you would invest  11,400  in ESSILORLUXOTTICA 12ON on October 23, 2024 and sell it today you would earn a total of  700.00  from holding ESSILORLUXOTTICA 12ON or generate 6.14% 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.  ESSILORLUXOTTICA 12ON

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.

ESSILORLUXOTTICA 12ON

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ESSILORLUXOTTICA 12ON are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, ESSILORLUXOTTICA may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Gladstone Investment and ESSILORLUXOTTICA

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

The idea behind Gladstone Investment and ESSILORLUXOTTICA 12ON 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.