Correlation Between Gladstone Investment and WD 40

Can any of the company-specific risk be diversified away by investing in both Gladstone Investment and WD 40 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 WD 40 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gladstone Investment and WD 40 Company, you can compare the effects of market volatilities on Gladstone Investment and WD 40 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 WD 40. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gladstone Investment and WD 40.

Diversification Opportunities for Gladstone Investment and WD 40

0.09

Correlation Coefficient

Gladstone Investment  WD 40

Significant diversification

The 3 months correlation between Gladstone and WD1 is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Gladstone Investment and WD 40 Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WD 40 Company 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 WD 40. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WD 40 Company has no effect on the direction of Gladstone Investment i.e., Gladstone Investment and WD 40 go up and down completely randomly.

Pair Corralation between Gladstone Investment and WD 40

Assuming the 90 days horizon Gladstone Investment is expected to generate 0.96 times more return on investment than WD 40. However, Gladstone Investment is 1.04 times less risky than WD 40. It trades about 0.01 of its potential returns per unit of risk. WD 40 Company is currently generating about -0.08 per unit of risk. If you would invest  1,292  in Gladstone Investment on October 23, 2024 and sell it today you would lose (4.00) from holding Gladstone Investment or give up 0.31% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Gladstone Investment  vs.  WD 40 Company

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.

WD 40 Company

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WD 40 Company has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Gladstone Investment and WD 40

The main advantage of trading using opposite Gladstone Investment and WD 40 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gladstone Investment position performs unexpectedly, WD 40 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 WD 40 will offset losses from the drop in WD 40's long position.

The idea behind Gladstone Investment and WD 40 Company 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.