Correlation Between American Assets and Gladstone Commercial

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

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

Diversification Opportunities for American Assets and Gladstone Commercial

0.78

Correlation Coefficient

American Assets  Gladstone Commercial

Poor diversification

The 3 months correlation between American and Gladstone is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding American Assets Trust and Gladstone Commercial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gladstone Commercial Corp and American Assets 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 American Assets Trust 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 Corp has no effect on the direction of American Assets i.e., American Assets and Gladstone Commercial go up and down completely randomly.

Pair Corralation between American Assets and Gladstone Commercial

Considering the 90-day investment horizon American Assets Trust is expected to generate 1.7 times more return on investment than Gladstone Commercial. However, American Assets is 1.7 times more volatile than Gladstone Commercial Corp. It trades about 0.09 of its potential returns per unit of risk. Gladstone Commercial Corp is currently generating about 0.15 per unit of risk. If you would invest  2,662  in American Assets Trust on September 3, 2024 and sell it today you would earn a total of  182.00  from holding American Assets Trust or generate 6.84% return on investment over 90 days.

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

American Assets Trust  vs.  Gladstone Commercial Corp

American Assets Trust

Risk-Adjusted Performance

7 of 100

OK

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

Gladstone Commercial Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gladstone Commercial Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Gladstone Commercial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with American Assets and Gladstone Commercial

The main advantage of trading using opposite American Assets and Gladstone Commercial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Assets 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 American Assets Trust and Gladstone Commercial Corp 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.