Correlation Between Gladstone Investment and Edgewell Personal

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

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

Diversification Opportunities for Gladstone Investment and Edgewell Personal

0.08

Correlation Coefficient

Gladstone Investment  Edgewell Personal

Significant diversification

The 3 months correlation between Gladstone and Edgewell is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Gladstone Investment and Edgewell Personal Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edgewell Personal Care 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 Edgewell Personal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edgewell Personal Care has no effect on the direction of Gladstone Investment i.e., Gladstone Investment and Edgewell Personal go up and down completely randomly.

Pair Corralation between Gladstone Investment and Edgewell Personal

Assuming the 90 days horizon Gladstone Investment is expected to generate 0.26 times more return on investment than Edgewell Personal. However, Gladstone Investment is 3.89 times less risky than Edgewell Personal. It trades about 0.05 of its potential returns per unit of risk. Edgewell Personal Care is currently generating about -0.53 per unit of risk. If you would invest  2,462  in Gladstone Investment on October 8, 2024 and sell it today you would earn a total of  7.00  from holding Gladstone Investment or generate 0.28% return on investment over 90 days.

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

Gladstone Investment  vs.  Edgewell Personal Care

Gladstone Investment

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gladstone Investment are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Gladstone Investment is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Edgewell Personal Care

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Edgewell Personal Care has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Edgewell Personal is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Gladstone Investment and Edgewell Personal

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

The idea behind Gladstone Investment and Edgewell Personal Care 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.