Correlation Between Gladstone Investment and Summit Bank

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

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

Diversification Opportunities for Gladstone Investment and Summit Bank

0.48

Correlation Coefficient

Gladstone Investment  Summit Bank

Very weak diversification

The 3 months correlation between Gladstone and Summit is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Gladstone Investment and Summit Bank Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Bank Group 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 Summit Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Bank Group has no effect on the direction of Gladstone Investment i.e., Gladstone Investment and Summit Bank go up and down completely randomly.

Pair Corralation between Gladstone Investment and Summit Bank

Assuming the 90 days horizon Gladstone Investment is expected to generate 5.87 times less return on investment than Summit Bank. But when comparing it to its historical volatility, Gladstone Investment is 6.51 times less risky than Summit Bank. It trades about 0.09 of its potential returns per unit of risk. Summit Bank Group is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,060  in Summit Bank Group on October 12, 2024 and sell it today you would earn a total of  350.00  from holding Summit Bank Group or generate 33.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	89.84%
Values	Daily Returns

Gladstone Investment  vs.  Summit Bank Group

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. 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.

Summit Bank Group

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Summit Bank Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward-looking signals, Summit Bank may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Gladstone Investment and Summit Bank

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

The idea behind Gladstone Investment and Summit Bank Group 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.