Correlation Between Gladstone Investment and Zurich Insurance

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

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

Diversification Opportunities for Gladstone Investment and Zurich Insurance

0.33

Correlation Coefficient

Gladstone Investment  Zurich Insurance

Weak diversification

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

Pair Corralation between Gladstone Investment and Zurich Insurance

Assuming the 90 days horizon Gladstone Investment is expected to generate 0.78 times more return on investment than Zurich Insurance. However, Gladstone Investment is 1.28 times less risky than Zurich Insurance. It trades about 0.15 of its potential returns per unit of risk. Zurich Insurance Group is currently generating about 0.03 per unit of risk. If you would invest  1,227  in Gladstone Investment on October 20, 2024 and sell it today you would earn a total of  45.00  from holding Gladstone Investment or generate 3.67% 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.  Zurich Insurance Group

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.

Zurich Insurance

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Zurich Insurance Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable forward indicators, Zurich Insurance 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 Zurich Insurance

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

The idea behind Gladstone Investment and Zurich Insurance Group 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.