Correlation Between Gladstone Commercial and Gladstone Land

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

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

Diversification Opportunities for Gladstone Commercial and Gladstone Land

0.78

Correlation Coefficient

Gladstone Commercial  Gladstone Land

Poor diversification

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

Pair Corralation between Gladstone Commercial and Gladstone Land

Assuming the 90 days horizon Gladstone Commercial Corp is expected to generate 2.62 times more return on investment than Gladstone Land. However, Gladstone Commercial is 2.62 times more volatile than Gladstone Land Corp. It trades about 0.11 of its potential returns per unit of risk. Gladstone Land Corp is currently generating about 0.13 per unit of risk. If you would invest  2,263  in Gladstone Commercial Corp on September 13, 2024 and sell it today you would earn a total of  112.00  from holding Gladstone Commercial Corp or generate 4.95% return on investment over 90 days.

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

Gladstone Commercial Corp  vs.  Gladstone Land Corp

Gladstone Commercial Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gladstone Commercial Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Gladstone Commercial is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Gladstone Land Corp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gladstone Land Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Gladstone Land is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Gladstone Commercial and Gladstone Land

The main advantage of trading using opposite Gladstone Commercial and Gladstone Land positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gladstone Commercial 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 Gladstone Commercial Corp and Gladstone Land 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.