Correlation Between GLADSTONE LAND and First Industrial
Can any of the company-specific risk be diversified away by investing in both GLADSTONE LAND and First Industrial 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 LAND and First Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GLADSTONE LAND L 001 and First Industrial Realty, you can compare the effects of market volatilities on GLADSTONE LAND and First Industrial 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 LAND with a short position of First Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of GLADSTONE LAND and First Industrial.
Diversification Opportunities for GLADSTONE LAND and First Industrial
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between GLADSTONE and First is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding GLADSTONE LAND L 001 and First Industrial Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Industrial Realty and GLADSTONE LAND 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 LAND L 001 are associated (or correlated) with First Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Industrial Realty has no effect on the direction of GLADSTONE LAND i.e., GLADSTONE LAND and First Industrial go up and down completely randomly.
Pair Corralation between GLADSTONE LAND and First Industrial
Assuming the 90 days horizon GLADSTONE LAND L 001 is expected to under-perform the First Industrial. In addition to that, GLADSTONE LAND is 1.3 times more volatile than First Industrial Realty. It trades about -0.21 of its total potential returns per unit of risk. First Industrial Realty is currently generating about -0.01 per unit of volatility. If you would invest 4,903 in First Industrial Realty on September 26, 2024 and sell it today you would lose (63.00) from holding First Industrial Realty or give up 1.28% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
GLADSTONE LAND L 001 vs. First Industrial Realty
Performance |
Timeline |
GLADSTONE LAND L |
First Industrial Realty |
GLADSTONE LAND and First Industrial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with GLADSTONE LAND and First Industrial
The main advantage of trading using opposite GLADSTONE LAND and First Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GLADSTONE LAND position performs unexpectedly, First Industrial 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 First Industrial will offset losses from the drop in First Industrial's long position.GLADSTONE LAND vs. Extra Space Storage | GLADSTONE LAND vs. First Industrial Realty | GLADSTONE LAND vs. Warehouses De Pauw | GLADSTONE LAND vs. National Storage Affiliates |
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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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