Correlation Between Gladstone Investment and AGNC INVESTMENT

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

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

Diversification Opportunities for Gladstone Investment and AGNC INVESTMENT

0.22

Correlation Coefficient

Gladstone Investment  AGNC INVESTMENT

Modest diversification

The 3 months correlation between Gladstone and AGNC is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Gladstone Investment and AGNC INVESTMENT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGNC INVESTMENT and Gladstone Investment 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 Investment are associated (or correlated) with AGNC INVESTMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGNC INVESTMENT has no effect on the direction of Gladstone Investment i.e., Gladstone Investment and AGNC INVESTMENT go up and down completely randomly.

Pair Corralation between Gladstone Investment and AGNC INVESTMENT

Assuming the 90 days horizon Gladstone Investment is expected to under-perform the AGNC INVESTMENT. In addition to that, Gladstone Investment is 1.32 times more volatile than AGNC INVESTMENT. It trades about -0.13 of its total potential returns per unit of risk. AGNC INVESTMENT is currently generating about -0.08 per unit of volatility. If you would invest  920.00  in AGNC INVESTMENT on September 23, 2024 and sell it today you would lose (16.00) from holding AGNC INVESTMENT or give up 1.74% of portfolio value over 90 days.

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

Gladstone Investment  vs.  AGNC INVESTMENT

Gladstone Investment

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gladstone Investment are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Gladstone Investment may actually be approaching a critical reversion point that can send shares even higher in January 2025.

AGNC INVESTMENT

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AGNC INVESTMENT are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, AGNC INVESTMENT is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Gladstone Investment and AGNC INVESTMENT

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

The idea behind Gladstone Investment and AGNC 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.