Correlation Between Gladstone Investment and JAPAN TOBACCO

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

By analyzing existing cross correlation between Gladstone Investment and JAPAN TOBACCO UNSPADR12, you can compare the effects of market volatilities on Gladstone Investment and JAPAN TOBACCO 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 JAPAN TOBACCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gladstone Investment and JAPAN TOBACCO.

Diversification Opportunities for Gladstone Investment and JAPAN TOBACCO

-0.18

Correlation Coefficient

Gladstone Investment  JAPAN TOBACCO

Good diversification

The 3 months correlation between Gladstone and JAPAN is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Gladstone Investment and JAPAN TOBACCO UNSPADR12 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JAPAN TOBACCO UNSPADR12 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 JAPAN TOBACCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JAPAN TOBACCO UNSPADR12 has no effect on the direction of Gladstone Investment i.e., Gladstone Investment and JAPAN TOBACCO go up and down completely randomly.

Pair Corralation between Gladstone Investment and JAPAN TOBACCO

Assuming the 90 days horizon Gladstone Investment is expected to generate 1.53 times more return on investment than JAPAN TOBACCO. However, Gladstone Investment is 1.53 times more volatile than JAPAN TOBACCO UNSPADR12. It trades about 0.16 of its potential returns per unit of risk. JAPAN TOBACCO UNSPADR12 is currently generating about 0.02 per unit of risk. If you would invest  1,050  in Gladstone Investment on September 12, 2024 and sell it today you would earn a total of  236.00  from holding Gladstone Investment or generate 22.48% 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.  JAPAN TOBACCO UNSPADR12

Gladstone Investment

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gladstone Investment are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Gladstone Investment reported solid returns over the last few months and may actually be approaching a breakup point.

JAPAN TOBACCO UNSPADR12

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in JAPAN TOBACCO UNSPADR12 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, JAPAN TOBACCO is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Gladstone Investment and JAPAN TOBACCO

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

The idea behind Gladstone Investment and JAPAN TOBACCO UNSPADR12 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .