Correlation Between Golub Capital and Gladstone Capital

Can any of the company-specific risk be diversified away by investing in both Golub Capital and Gladstone 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 Golub Capital and Gladstone Capital 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 Capital, you can compare the effects of market volatilities on Golub Capital and Gladstone 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 Golub Capital with a short position of Gladstone Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golub Capital and Gladstone Capital.

Diversification Opportunities for Golub Capital and Gladstone Capital

0.67

Correlation Coefficient

Golub Capital  Gladstone Capital

Poor diversification

The 3 months correlation between Golub and Gladstone is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Golub Capital BDC and Gladstone Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gladstone Capital 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 Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gladstone Capital has no effect on the direction of Golub Capital i.e., Golub Capital and Gladstone Capital go up and down completely randomly.

Pair Corralation between Golub Capital and Gladstone Capital

Given the investment horizon of 90 days Golub Capital is expected to generate 3.41 times less return on investment than Gladstone Capital. But when comparing it to its historical volatility, Golub Capital BDC is 1.54 times less risky than Gladstone Capital. It trades about 0.16 of its potential returns per unit of risk. Gladstone Capital is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest  2,773  in Gladstone Capital on October 24, 2024 and sell it today you would earn a total of  207.00  from holding Gladstone Capital or generate 7.46% return on investment over 90 days.

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

Golub Capital BDC  vs.  Gladstone Capital

Golub Capital BDC

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Golub Capital BDC are ranked lower than 3 (%) 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 latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Gladstone Capital

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Gladstone Capital are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal basic indicators, Gladstone Capital exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Golub Capital and Gladstone Capital

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

The idea behind Golub Capital BDC and Gladstone Capital 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.