Correlation Between Gladstone Investment and Workday

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

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

Diversification Opportunities for Gladstone Investment and Workday

0.38

Correlation Coefficient

Gladstone Investment  Workday

Weak diversification

The 3 months correlation between Gladstone and Workday is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Gladstone Investment and Workday in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Workday 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 Workday. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Workday has no effect on the direction of Gladstone Investment i.e., Gladstone Investment and Workday go up and down completely randomly.

Pair Corralation between Gladstone Investment and Workday

Assuming the 90 days horizon Gladstone Investment is expected to generate 2.81 times less return on investment than Workday. But when comparing it to its historical volatility, Gladstone Investment is 1.38 times less risky than Workday. It trades about 0.04 of its potential returns per unit of risk. Workday is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  22,265  in Workday on October 11, 2024 and sell it today you would earn a total of  2,230  from holding Workday or generate 10.02% return on investment over 90 days.

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

Gladstone Investment  vs.  Workday

Gladstone Investment

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gladstone Investment are ranked lower than 3 (%) 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 newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Workday

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Workday are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Workday may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Gladstone Investment and Workday

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

The idea behind Gladstone Investment and Workday 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.