Correlation Between Gladstone Investment and MidCap Financial

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

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

Diversification Opportunities for Gladstone Investment and MidCap Financial

-0.02

Correlation Coefficient

Gladstone Investment  MidCap Financial

Good diversification

The 3 months correlation between Gladstone and MidCap is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Gladstone Investment and MidCap Financial Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MidCap Financial Inv 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 MidCap Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MidCap Financial Inv has no effect on the direction of Gladstone Investment i.e., Gladstone Investment and MidCap Financial go up and down completely randomly.

Pair Corralation between Gladstone Investment and MidCap Financial

Given the investment horizon of 90 days Gladstone Investment is expected to generate 1.49 times more return on investment than MidCap Financial. However, Gladstone Investment is 1.49 times more volatile than MidCap Financial Investment. It trades about 0.19 of its potential returns per unit of risk. MidCap Financial Investment is currently generating about 0.05 per unit of risk. If you would invest  1,189  in Gladstone Investment on September 12, 2024 and sell it today you would earn a total of  192.00  from holding Gladstone Investment or generate 16.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Gladstone Investment  vs.  MidCap Financial Investment

Gladstone Investment

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gladstone Investment are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward indicators, Gladstone Investment displayed solid returns over the last few months and may actually be approaching a breakup point.

MidCap Financial Inv

Risk-Adjusted Performance

4 of 100

Modest

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

Pair Trading with Gladstone Investment and MidCap Financial

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

The idea behind Gladstone Investment and MidCap Financial 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.