Correlation Between Rand Capital and Gladstone Investment

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

Diversification Opportunities for Rand Capital and Gladstone Investment

-0.04

Correlation Coefficient

Rand Capital  Gladstone Investment

Good diversification

The 3 months correlation between Rand and Gladstone is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Rand Capital Corp and Gladstone Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gladstone Investment and Rand 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 Rand Capital Corp 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 Rand Capital i.e., Rand Capital and Gladstone Investment go up and down completely randomly.

Pair Corralation between Rand Capital and Gladstone Investment

Given the investment horizon of 90 days Rand Capital Corp is expected to generate 2.2 times more return on investment than Gladstone Investment. However, Rand Capital is 2.2 times more volatile than Gladstone Investment. It trades about 0.15 of its potential returns per unit of risk. Gladstone Investment is currently generating about 0.2 per unit of risk. If you would invest  1,660  in Rand Capital Corp on September 12, 2024 and sell it today you would earn a total of  425.00  from holding Rand Capital Corp or generate 25.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.83%
Values	Daily Returns

Rand Capital Corp  vs.  Gladstone Investment

Rand Capital Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Rand Capital Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Rand Capital exhibited solid returns over the last few months and may actually be approaching a breakup point.

Gladstone Investment

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gladstone Investment are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward indicators, Gladstone Investment displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Rand Capital and Gladstone Investment

The main advantage of trading using opposite Rand Capital and Gladstone Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rand 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 Rand Capital Corp 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.