Correlation Between Gladstone Investment and FuelCell Energy

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

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

Diversification Opportunities for Gladstone Investment and FuelCell Energy

-0.33

Correlation Coefficient

Gladstone Investment  FuelCell Energy

Very good diversification

The 3 months correlation between Gladstone and FuelCell is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Gladstone Investment and FuelCell Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FuelCell Energy 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 FuelCell Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FuelCell Energy has no effect on the direction of Gladstone Investment i.e., Gladstone Investment and FuelCell Energy go up and down completely randomly.

Pair Corralation between Gladstone Investment and FuelCell Energy

Assuming the 90 days horizon Gladstone Investment is expected to generate 0.27 times more return on investment than FuelCell Energy. However, Gladstone Investment is 3.7 times less risky than FuelCell Energy. It trades about 0.06 of its potential returns per unit of risk. FuelCell Energy is currently generating about -0.04 per unit of risk. If you would invest  878.00  in Gladstone Investment on September 26, 2024 and sell it today you would earn a total of  411.00  from holding Gladstone Investment or generate 46.81% return on investment over 90 days.

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

Gladstone Investment  vs.  FuelCell Energy

Gladstone Investment

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gladstone Investment are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Gladstone Investment may actually be approaching a critical reversion point that can send shares even higher in January 2025.

FuelCell Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FuelCell Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, FuelCell Energy is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Gladstone Investment and FuelCell Energy

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

The idea behind Gladstone Investment and FuelCell Energy 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.

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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.