Correlation Between Gladstone Investment and Invesco Pennsylvania

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

By analyzing existing cross correlation between Gladstone Investment and Invesco Pennsylvania Value, you can compare the effects of market volatilities on Gladstone Investment and Invesco Pennsylvania 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 Invesco Pennsylvania. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gladstone Investment and Invesco Pennsylvania.

Diversification Opportunities for Gladstone Investment and Invesco Pennsylvania

0.33

Correlation Coefficient

Gladstone Investment  Invesco Pennsylvania

Weak diversification

The 3 months correlation between Gladstone and Invesco is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Gladstone Investment and Invesco Pennsylvania Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Pennsylvania 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 Invesco Pennsylvania. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Pennsylvania has no effect on the direction of Gladstone Investment i.e., Gladstone Investment and Invesco Pennsylvania go up and down completely randomly.

Pair Corralation between Gladstone Investment and Invesco Pennsylvania

Given the investment horizon of 90 days Gladstone Investment is expected to generate 2.99 times more return on investment than Invesco Pennsylvania. However, Gladstone Investment is 2.99 times more volatile than Invesco Pennsylvania Value. It trades about 0.17 of its potential returns per unit of risk. Invesco Pennsylvania Value is currently generating about 0.12 per unit of risk. If you would invest  1,202  in Gladstone Investment on September 4, 2024 and sell it today you would earn a total of  173.00  from holding Gladstone Investment or generate 14.39% return on investment over 90 days.

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

Gladstone Investment  vs.  Invesco Pennsylvania Value

Gladstone Investment

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gladstone Investment are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain forward indicators, Gladstone Investment displayed solid returns over the last few months and may actually be approaching a breakup point.

Invesco Pennsylvania

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Pennsylvania Value are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Invesco Pennsylvania is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Gladstone Investment and Invesco Pennsylvania

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

The idea behind Gladstone Investment and Invesco Pennsylvania Value 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.