Correlation Between GREENLIGHT CAP and Gladstone Investment

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

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

Diversification Opportunities for GREENLIGHT CAP and Gladstone Investment

0.48

Correlation Coefficient

GREENLIGHT CAP  Gladstone Investment

Very weak diversification

The 3 months correlation between GREENLIGHT and Gladstone is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding GREENLIGHT CAP RE and Gladstone Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gladstone Investment and GREENLIGHT CAP 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 GREENLIGHT CAP RE 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 GREENLIGHT CAP i.e., GREENLIGHT CAP and Gladstone Investment go up and down completely randomly.

Pair Corralation between GREENLIGHT CAP and Gladstone Investment

Assuming the 90 days trading horizon GREENLIGHT CAP RE is expected to generate 1.01 times more return on investment than Gladstone Investment. However, GREENLIGHT CAP is 1.01 times more volatile than Gladstone Investment. It trades about 0.05 of its potential returns per unit of risk. Gladstone Investment is currently generating about 0.03 per unit of risk. If you would invest  1,190  in GREENLIGHT CAP RE on September 23, 2024 and sell it today you would earn a total of  140.00  from holding GREENLIGHT CAP RE or generate 11.76% return on investment over 90 days.

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

GREENLIGHT CAP RE  vs.  Gladstone Investment

GREENLIGHT CAP RE

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GREENLIGHT CAP RE are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, GREENLIGHT CAP is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Gladstone Investment

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gladstone Investment are ranked lower than 6 (%) 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 January 2025.

Pair Trading with GREENLIGHT CAP and Gladstone Investment

The main advantage of trading using opposite GREENLIGHT CAP and Gladstone Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GREENLIGHT CAP 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 GREENLIGHT CAP RE 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.