Correlation Between Associated Capital and Gladstone Investment

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

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

Diversification Opportunities for Associated Capital and Gladstone Investment

-0.3

Correlation Coefficient

Associated Capital  Gladstone Investment

Very good diversification

The 3 months correlation between Associated and Gladstone is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Associated Capital Group and Gladstone Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gladstone Investment and Associated Capital 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 Associated Capital Group 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 Associated Capital i.e., Associated Capital and Gladstone Investment go up and down completely randomly.

Pair Corralation between Associated Capital and Gladstone Investment

Allowing for the 90-day total investment horizon Associated Capital Group is expected to under-perform the Gladstone Investment. In addition to that, Associated Capital is 3.27 times more volatile than Gladstone Investment. It trades about -0.04 of its total potential returns per unit of risk. Gladstone Investment is currently generating about 0.0 per unit of volatility. If you would invest  2,327  in Gladstone Investment on September 24, 2024 and sell it today you would lose (1.00) from holding Gladstone Investment or give up 0.04% of portfolio value over 90 days.

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

Associated Capital Group  vs.  Gladstone Investment

Associated Capital

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Associated Capital Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent fundamental indicators, Associated Capital may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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. In spite of fairly strong basic indicators, Gladstone Investment is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Associated Capital and Gladstone Investment

The main advantage of trading using opposite Associated Capital and Gladstone Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Associated Capital 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 Associated Capital Group 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 Global Correlations module to find global opportunities by holding instruments from different markets.