Correlation Between Gladstone Commercial and Boston Properties

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

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

Diversification Opportunities for Gladstone Commercial and Boston Properties

-0.09

Correlation Coefficient

Gladstone Commercial  Boston Properties

Good diversification

The 3 months correlation between Gladstone and Boston is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Gladstone Commercial and Boston Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Properties and Gladstone Commercial 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 Commercial are associated (or correlated) with Boston Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boston Properties has no effect on the direction of Gladstone Commercial i.e., Gladstone Commercial and Boston Properties go up and down completely randomly.

Pair Corralation between Gladstone Commercial and Boston Properties

Given the investment horizon of 90 days Gladstone Commercial is expected to generate 3.09 times less return on investment than Boston Properties. But when comparing it to its historical volatility, Gladstone Commercial is 1.36 times less risky than Boston Properties. It trades about 0.03 of its potential returns per unit of risk. Boston Properties is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  7,853  in Boston Properties on September 16, 2024 and sell it today you would earn a total of  140.00  from holding Boston Properties or generate 1.78% return on investment over 90 days.

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

Gladstone Commercial  vs.  Boston Properties

Gladstone Commercial

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gladstone Commercial are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Gladstone Commercial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Boston Properties

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Boston Properties has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Boston Properties is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Gladstone Commercial and Boston Properties

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

The idea behind Gladstone Commercial and Boston Properties 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.