Correlation Between Postal Savings and Gladstone Investment

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

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

Diversification Opportunities for Postal Savings and Gladstone Investment

0.41

Correlation Coefficient

Postal Savings  Gladstone Investment

Very weak diversification

The 3 months correlation between Postal and Gladstone is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Postal Savings Bank and Gladstone Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gladstone Investment and Postal Savings 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 Postal Savings Bank are associated (or correlated) with Gladstone Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gladstone Investment has no effect on the direction of Postal Savings i.e., Postal Savings and Gladstone Investment go up and down completely randomly.

Pair Corralation between Postal Savings and Gladstone Investment

Assuming the 90 days horizon Postal Savings Bank is expected to generate 3.48 times more return on investment than Gladstone Investment. However, Postal Savings is 3.48 times more volatile than Gladstone Investment. It trades about 0.16 of its potential returns per unit of risk. Gladstone Investment is currently generating about 0.06 per unit of risk. If you would invest  39.00  in Postal Savings Bank on December 4, 2024 and sell it today you would earn a total of  21.00  from holding Postal Savings Bank or generate 53.85% return on investment over 90 days.

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

Postal Savings Bank  vs.  Gladstone Investment

Postal Savings Bank

Risk-Adjusted Performance

Good

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

Gladstone Investment

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gladstone Investment are ranked lower than 4 (%) 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.

Pair Trading with Postal Savings and Gladstone Investment

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

The idea behind Postal Savings Bank and Gladstone Investment 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.