Correlation Between Gladstone Investment and Genco Shipping

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

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

Diversification Opportunities for Gladstone Investment and Genco Shipping

0.48

Correlation Coefficient

Gladstone Investment  Genco Shipping

Very weak diversification

The 3 months correlation between Gladstone and Genco is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Gladstone Investment and Genco Shipping Trading in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genco Shipping Trading 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 Genco Shipping. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genco Shipping Trading has no effect on the direction of Gladstone Investment i.e., Gladstone Investment and Genco Shipping go up and down completely randomly.

Pair Corralation between Gladstone Investment and Genco Shipping

Assuming the 90 days horizon Gladstone Investment is expected to generate 0.66 times more return on investment than Genco Shipping. However, Gladstone Investment is 1.51 times less risky than Genco Shipping. It trades about 0.02 of its potential returns per unit of risk. Genco Shipping Trading is currently generating about 0.0 per unit of risk. If you would invest  1,241  in Gladstone Investment on December 30, 2024 and sell it today you would earn a total of  16.00  from holding Gladstone Investment or generate 1.29% return on investment over 90 days.

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

Gladstone Investment  vs.  Genco Shipping Trading

Gladstone Investment

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Gladstone Investment are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Gladstone Investment is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Genco Shipping Trading

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Gladstone Investment and Genco Shipping

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

The idea behind Gladstone Investment and Genco Shipping Trading 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.