Correlation Between HYDROFARM HLD and Gladstone Commercial

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

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

Diversification Opportunities for HYDROFARM HLD and Gladstone Commercial

0.29

Correlation Coefficient

HYDROFARM HLD  Gladstone Commercial

Modest diversification

The 3 months correlation between HYDROFARM and Gladstone is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding HYDROFARM HLD GRP and Gladstone Commercial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gladstone Commercial and HYDROFARM HLD 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 HYDROFARM HLD GRP are associated (or correlated) with Gladstone Commercial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gladstone Commercial has no effect on the direction of HYDROFARM HLD i.e., HYDROFARM HLD and Gladstone Commercial go up and down completely randomly.

Pair Corralation between HYDROFARM HLD and Gladstone Commercial

Assuming the 90 days trading horizon HYDROFARM HLD is expected to generate 4.8 times less return on investment than Gladstone Commercial. In addition to that, HYDROFARM HLD is 2.38 times more volatile than Gladstone Commercial. It trades about 0.01 of its total potential returns per unit of risk. Gladstone Commercial is currently generating about 0.1 per unit of volatility. If you would invest  1,383  in Gladstone Commercial on September 27, 2024 and sell it today you would earn a total of  149.00  from holding Gladstone Commercial or generate 10.77% return on investment over 90 days.

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

HYDROFARM HLD GRP  vs.  Gladstone Commercial

HYDROFARM HLD GRP

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days HYDROFARM HLD GRP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, HYDROFARM HLD is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Gladstone Commercial

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gladstone Commercial are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Gladstone Commercial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with HYDROFARM HLD and Gladstone Commercial

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

The idea behind HYDROFARM HLD GRP and Gladstone Commercial 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..