Correlation Between WhiteHorse Finance and Gladstone Investment

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

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

Diversification Opportunities for WhiteHorse Finance and Gladstone Investment

-0.05

Correlation Coefficient

WhiteHorse Finance  Gladstone Investment

Good diversification

The 3 months correlation between WhiteHorse and Gladstone is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding WhiteHorse Finance and Gladstone Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gladstone Investment and WhiteHorse Finance 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 WhiteHorse Finance 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 WhiteHorse Finance i.e., WhiteHorse Finance and Gladstone Investment go up and down completely randomly.

Pair Corralation between WhiteHorse Finance and Gladstone Investment

Considering the 90-day investment horizon WhiteHorse Finance is expected to under-perform the Gladstone Investment. But the stock apears to be less risky and, when comparing its historical volatility, WhiteHorse Finance is 1.05 times less risky than Gladstone Investment. The stock trades about -0.04 of its potential returns per unit of risk. The Gladstone Investment is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  1,189  in Gladstone Investment on September 12, 2024 and sell it today you would earn a total of  192.00  from holding Gladstone Investment or generate 16.15% return on investment over 90 days.

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

WhiteHorse Finance  vs.  Gladstone Investment

WhiteHorse Finance

Risk-Adjusted Performance

0 of 100

Very Weak

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

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 WhiteHorse Finance and Gladstone Investment

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

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