Correlation Between Allstate and GLADSTONE LAND

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

By analyzing existing cross correlation between The Allstate and GLADSTONE LAND L 001, you can compare the effects of market volatilities on Allstate and GLADSTONE LAND 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 Allstate with a short position of GLADSTONE LAND. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allstate and GLADSTONE LAND.

Diversification Opportunities for Allstate and GLADSTONE LAND

-0.72

Correlation Coefficient

Allstate  GLADSTONE LAND

Pay attention - limited upside

The 3 months correlation between Allstate and GLADSTONE is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding The Allstate and GLADSTONE LAND L 001 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GLADSTONE LAND L and Allstate 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 The Allstate are associated (or correlated) with GLADSTONE LAND. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GLADSTONE LAND L has no effect on the direction of Allstate i.e., Allstate and GLADSTONE LAND go up and down completely randomly.

Pair Corralation between Allstate and GLADSTONE LAND

Assuming the 90 days horizon The Allstate is expected to generate 1.12 times more return on investment than GLADSTONE LAND. However, Allstate is 1.12 times more volatile than GLADSTONE LAND L 001. It trades about 0.07 of its potential returns per unit of risk. GLADSTONE LAND L 001 is currently generating about -0.21 per unit of risk. If you would invest  16,926  in The Allstate on September 26, 2024 and sell it today you would earn a total of  1,234  from holding The Allstate or generate 7.29% return on investment over 90 days.

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

The Allstate  vs.  GLADSTONE LAND L 001

Allstate

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in The Allstate are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Allstate may actually be approaching a critical reversion point that can send shares even higher in January 2025.

GLADSTONE LAND L

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GLADSTONE LAND L 001 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Allstate and GLADSTONE LAND

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

The idea behind The Allstate and GLADSTONE LAND L 001 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.