Correlation Between Moelis and Gladstone Investment

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

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

Diversification Opportunities for Moelis and Gladstone Investment

0.32

Correlation Coefficient

Moelis  Gladstone Investment

Weak diversification

The 3 months correlation between Moelis and Gladstone is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Moelis Co and Gladstone Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gladstone Investment and Moelis 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 Moelis Co 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 Moelis i.e., Moelis and Gladstone Investment go up and down completely randomly.

Pair Corralation between Moelis and Gladstone Investment

Allowing for the 90-day total investment horizon Moelis Co is expected to under-perform the Gladstone Investment. In addition to that, Moelis is 7.2 times more volatile than Gladstone Investment. It trades about -0.59 of its total potential returns per unit of risk. Gladstone Investment is currently generating about -0.24 per unit of volatility. If you would invest  2,339  in Gladstone Investment on December 10, 2024 and sell it today you would lose (35.00) from holding Gladstone Investment or give up 1.5% of portfolio value over 90 days.

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

Moelis Co  vs.  Gladstone Investment

Moelis

Risk-Adjusted Performance

Very Weak

Over the last 90 days Moelis Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Gladstone Investment

Risk-Adjusted Performance

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 fairly strong basic indicators, Gladstone Investment is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Moelis and Gladstone Investment

The main advantage of trading using opposite Moelis and Gladstone Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Moelis 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 Moelis Co 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.

Check out your portfolio center.

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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.