Correlation Between Gabelli Multimedia and Gladstone Commercial

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

By analyzing existing cross correlation between The Gabelli Multimedia and Gladstone Commercial Corp, you can compare the effects of market volatilities on Gabelli Multimedia and Gladstone Commercial 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 Gabelli Multimedia with a short position of Gladstone Commercial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gabelli Multimedia and Gladstone Commercial.

Diversification Opportunities for Gabelli Multimedia and Gladstone Commercial

-0.43

Correlation Coefficient

Gabelli Multimedia  Gladstone Commercial

Very good diversification

The 3 months correlation between Gabelli and Gladstone is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding The Gabelli Multimedia and Gladstone Commercial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gladstone Commercial Corp and Gabelli Multimedia 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 The Gabelli Multimedia are associated (or correlated) with Gladstone Commercial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gladstone Commercial Corp has no effect on the direction of Gabelli Multimedia i.e., Gabelli Multimedia and Gladstone Commercial go up and down completely randomly.

Pair Corralation between Gabelli Multimedia and Gladstone Commercial

Assuming the 90 days trading horizon The Gabelli Multimedia is expected to generate 1.28 times more return on investment than Gladstone Commercial. However, Gabelli Multimedia is 1.28 times more volatile than Gladstone Commercial Corp. It trades about -0.07 of its potential returns per unit of risk. Gladstone Commercial Corp is currently generating about -0.3 per unit of risk. If you would invest  2,335  in The Gabelli Multimedia on September 30, 2024 and sell it today you would lose (50.00) from holding The Gabelli Multimedia or give up 2.14% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

The Gabelli Multimedia  vs.  Gladstone Commercial Corp

The Gabelli Multimedia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Gabelli Multimedia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Gabelli Multimedia is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Gladstone Commercial Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Gabelli Multimedia and Gladstone Commercial

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

The idea behind The Gabelli Multimedia and Gladstone Commercial Corp 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.