Correlation Between Gladstone Capital and Logan Ridge

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

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

Diversification Opportunities for Gladstone Capital and Logan Ridge

-0.07

Correlation Coefficient

Gladstone Capital  Logan Ridge

Good diversification

The 3 months correlation between Gladstone and Logan is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Gladstone Capital and Logan Ridge Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Logan Ridge Finance and Gladstone 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 Gladstone Capital are associated (or correlated) with Logan Ridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Logan Ridge Finance has no effect on the direction of Gladstone Capital i.e., Gladstone Capital and Logan Ridge go up and down completely randomly.

Pair Corralation between Gladstone Capital and Logan Ridge

Given the investment horizon of 90 days Gladstone Capital is expected to generate 0.94 times more return on investment than Logan Ridge. However, Gladstone Capital is 1.07 times less risky than Logan Ridge. It trades about 0.01 of its potential returns per unit of risk. Logan Ridge Finance is currently generating about -0.12 per unit of risk. If you would invest  2,726  in Gladstone Capital on December 22, 2024 and sell it today you would earn a total of  7.00  from holding Gladstone Capital or generate 0.26% return on investment over 90 days.

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

Gladstone Capital  vs.  Logan Ridge Finance

Gladstone Capital

Risk-Adjusted Performance

Weak

Over the last 90 days Gladstone Capital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Gladstone Capital is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Logan Ridge Finance

Risk-Adjusted Performance

Very Weak

Over the last 90 days Logan Ridge Finance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Gladstone Capital and Logan Ridge

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

The idea behind Gladstone Capital and Logan Ridge Finance 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.