Correlation Between Gladstone Investment and PFIZER

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

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

Diversification Opportunities for Gladstone Investment and PFIZER

-0.06

Correlation Coefficient

Gladstone Investment  PFIZER

Good diversification

The 3 months correlation between Gladstone and PFIZER is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Gladstone Investment and PFIZER INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PFIZER INC 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 PFIZER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PFIZER INC has no effect on the direction of Gladstone Investment i.e., Gladstone Investment and PFIZER go up and down completely randomly.

Pair Corralation between Gladstone Investment and PFIZER

Assuming the 90 days horizon Gladstone Investment is expected to generate 5.48 times less return on investment than PFIZER. But when comparing it to its historical volatility, Gladstone Investment is 9.46 times less risky than PFIZER. It trades about 0.16 of its potential returns per unit of risk. PFIZER INC is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  6,472  in PFIZER INC on October 12, 2024 and sell it today you would earn a total of  322.00  from holding PFIZER INC or generate 4.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Gladstone Investment  vs.  PFIZER INC

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.

PFIZER INC

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PFIZER INC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, PFIZER is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Gladstone Investment and PFIZER

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

The idea behind Gladstone Investment and PFIZER INC 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.