Correlation Between Global Ship and Gladstone Capital

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

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

Diversification Opportunities for Global Ship and Gladstone Capital

0.53

Correlation Coefficient

Global Ship  Gladstone Capital

Very weak diversification

The 3 months correlation between Global and Gladstone is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Global Ship Lease and Gladstone Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gladstone Capital and Global Ship 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 Global Ship Lease 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 Global Ship i.e., Global Ship and Gladstone Capital go up and down completely randomly.

Pair Corralation between Global Ship and Gladstone Capital

Assuming the 90 days trading horizon Global Ship Lease is expected to generate 3.69 times more return on investment than Gladstone Capital. However, Global Ship is 3.69 times more volatile than Gladstone Capital. It trades about 0.09 of its potential returns per unit of risk. Gladstone Capital is currently generating about 0.12 per unit of risk. If you would invest  2,541  in Global Ship Lease on August 31, 2024 and sell it today you would earn a total of  95.00  from holding Global Ship Lease or generate 3.74% return on investment over 90 days.

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

Global Ship Lease  vs.  Gladstone Capital

Global Ship Lease

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Global Ship Lease are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong essential indicators, Global Ship is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Gladstone Capital

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gladstone Capital are ranked lower than 9 (%) 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 Global Ship and Gladstone Capital

The main advantage of trading using opposite Global Ship and Gladstone Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Ship 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 Global Ship Lease 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.

Check out your portfolio center.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.