Correlation Between Carlyle and Gladstone Capital

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

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

Diversification Opportunities for Carlyle and Gladstone Capital

0.66

Correlation Coefficient

Carlyle  Gladstone Capital

Poor diversification

The 3 months correlation between Carlyle and Gladstone is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Carlyle Group and Gladstone Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gladstone Capital and Carlyle 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 Carlyle Group are associated (or correlated) with Gladstone Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gladstone Capital has no effect on the direction of Carlyle i.e., Carlyle and Gladstone Capital go up and down completely randomly.

Pair Corralation between Carlyle and Gladstone Capital

Allowing for the 90-day total investment horizon Carlyle Group is expected to generate 12.43 times more return on investment than Gladstone Capital. However, Carlyle is 12.43 times more volatile than Gladstone Capital. It trades about 0.08 of its potential returns per unit of risk. Gladstone Capital is currently generating about 0.15 per unit of risk. If you would invest  5,074  in Carlyle Group on August 31, 2024 and sell it today you would earn a total of  196.00  from holding Carlyle Group or generate 3.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.65%
Values	Daily Returns

Carlyle Group  vs.  Gladstone Capital

Carlyle Group

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Carlyle Group are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating technical and fundamental indicators, Carlyle reported solid returns over the last few months and may actually be approaching a breakup point.

Gladstone Capital

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gladstone Capital are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental indicators, Gladstone Capital is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Carlyle and Gladstone Capital

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

The idea behind Carlyle Group and Gladstone Capital 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.