Correlation Between Gladstone Investment and Stellus Capital

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

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

Diversification Opportunities for Gladstone Investment and Stellus Capital

0.81

Correlation Coefficient

Gladstone Investment  Stellus Capital

Very poor diversification

The 3 months correlation between Gladstone and Stellus is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Gladstone Investment and Stellus Capital Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stellus Capital Inve 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 Stellus Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stellus Capital Inve has no effect on the direction of Gladstone Investment i.e., Gladstone Investment and Stellus Capital go up and down completely randomly.

Pair Corralation between Gladstone Investment and Stellus Capital

Given the investment horizon of 90 days Gladstone Investment is expected to generate 1.73 times more return on investment than Stellus Capital. However, Gladstone Investment is 1.73 times more volatile than Stellus Capital Investment. It trades about 0.15 of its potential returns per unit of risk. Stellus Capital Investment is currently generating about 0.08 per unit of risk. If you would invest  1,209  in Gladstone Investment on August 30, 2024 and sell it today you would earn a total of  143.00  from holding Gladstone Investment or generate 11.83% return on investment over 90 days.

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

Gladstone Investment  vs.  Stellus Capital Investment

Gladstone Investment

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gladstone Investment are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain forward indicators, Gladstone Investment may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Stellus Capital Inve

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Stellus Capital Investment are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Stellus Capital is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Gladstone Investment and Stellus Capital

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

The idea behind Gladstone Investment and Stellus Capital 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.

Check out your portfolio center.

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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .