Correlation Between Golub Capital and Gladstone Investment

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

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

Diversification Opportunities for Golub Capital and Gladstone Investment

0.08

Correlation Coefficient

Golub Capital  Gladstone Investment

Significant diversification

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

Pair Corralation between Golub Capital and Gladstone Investment

Given the investment horizon of 90 days Golub Capital BDC is expected to generate 0.7 times more return on investment than Gladstone Investment. However, Golub Capital BDC is 1.42 times less risky than Gladstone Investment. It trades about 0.07 of its potential returns per unit of risk. Gladstone Investment is currently generating about -0.02 per unit of risk. If you would invest  1,464  in Golub Capital BDC on October 9, 2024 and sell it today you would earn a total of  50.00  from holding Golub Capital BDC or generate 3.42% return on investment over 90 days.

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

Golub Capital BDC  vs.  Gladstone Investment

Golub Capital BDC

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Golub Capital BDC are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Golub Capital is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Gladstone Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gladstone Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Gladstone Investment is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Golub Capital and Gladstone Investment

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

The idea behind Golub Capital BDC and Gladstone 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.