Correlation Between Event Hospitality and Gladstone Investment

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

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

Diversification Opportunities for Event Hospitality and Gladstone Investment

0.58

Correlation Coefficient

Event Hospitality  Gladstone Investment

Very weak diversification

The 3 months correlation between Event and Gladstone is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Event Hospitality and and Gladstone Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gladstone Investment and Event Hospitality 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 Event Hospitality and 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 Event Hospitality i.e., Event Hospitality and Gladstone Investment go up and down completely randomly.

Pair Corralation between Event Hospitality and Gladstone Investment

Assuming the 90 days trading horizon Event Hospitality and is expected to under-perform the Gladstone Investment. But the stock apears to be less risky and, when comparing its historical volatility, Event Hospitality and is 1.12 times less risky than Gladstone Investment. The stock trades about -0.11 of its potential returns per unit of risk. The Gladstone Investment is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,278  in Gladstone Investment on October 8, 2024 and sell it today you would earn a total of  14.00  from holding Gladstone Investment or generate 1.1% return on investment over 90 days.

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

Event Hospitality and  vs.  Gladstone Investment

Event Hospitality

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Event Hospitality and are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Event Hospitality may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Gladstone Investment

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gladstone Investment are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Gladstone Investment may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Event Hospitality and Gladstone Investment

The main advantage of trading using opposite Event Hospitality and Gladstone Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Event Hospitality 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 Event Hospitality and 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.