Correlation Between Gladstone Capital and Armada Hflr

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

By analyzing existing cross correlation between Gladstone Capital and Armada Hflr Pr, you can compare the effects of market volatilities on Gladstone Capital and Armada Hflr 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 Armada Hflr. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gladstone Capital and Armada Hflr.

Diversification Opportunities for Gladstone Capital and Armada Hflr

0.69

Correlation Coefficient

Gladstone Capital  Armada Hflr

Poor diversification

The 1 month correlation between Gladstone and Armada is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Gladstone Capital and Armada Hflr Pr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Armada Hflr Pr 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 Armada Hflr. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Armada Hflr Pr has no effect on the direction of Gladstone Capital i.e., Gladstone Capital and Armada Hflr go up and down completely randomly.

Pair Corralation between Gladstone Capital and Armada Hflr

Given the investment horizon of 90 days Gladstone Capital is expected to generate 0.35 times more return on investment than Armada Hflr. However, Gladstone Capital is 2.85 times less risky than Armada Hflr. It trades about 0.32 of its potential returns per unit of risk. Armada Hflr Pr is currently generating about 0.09 per unit of risk. If you would invest  2,155  in Gladstone Capital on March 5, 2024 and sell it today you would earn a total of  85.00  from holding Gladstone Capital or generate 3.94% return on investment over 90 days.

Time Period	1 Month [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Gladstone Capital  vs.  Armada Hflr Pr

Gladstone Capital

Risk-Adjusted Performance

25 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gladstone Capital are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Gladstone Capital may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Armada Hflr Pr

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Armada Hflr Pr are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical indicators, Armada Hflr may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Pair Trading with Gladstone Capital and Armada Hflr

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

The idea behind Gladstone Capital and Armada Hflr Pr 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.