Correlation Between Hannon Armstrong and Gladstone Land

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

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

Diversification Opportunities for Hannon Armstrong and Gladstone Land

0.79

Correlation Coefficient

Hannon Armstrong  Gladstone Land

Poor diversification

The 3 months correlation between Hannon and Gladstone is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Hannon Armstrong Sustainable and Gladstone Land in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gladstone Land and Hannon Armstrong 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 Hannon Armstrong Sustainable 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 has no effect on the direction of Hannon Armstrong i.e., Hannon Armstrong and Gladstone Land go up and down completely randomly.

Pair Corralation between Hannon Armstrong and Gladstone Land

Given the investment horizon of 90 days Hannon Armstrong Sustainable is expected to generate 2.29 times more return on investment than Gladstone Land. However, Hannon Armstrong is 2.29 times more volatile than Gladstone Land. It trades about -0.1 of its potential returns per unit of risk. Gladstone Land is currently generating about -0.34 per unit of risk. If you would invest  3,460  in Hannon Armstrong Sustainable on September 18, 2024 and sell it today you would lose (588.00) from holding Hannon Armstrong Sustainable or give up 16.99% of portfolio value over 90 days.

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

Hannon Armstrong Sustainable  vs.  Gladstone Land

Hannon Armstrong Sus

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hannon Armstrong Sustainable has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Gladstone Land

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gladstone Land has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Hannon Armstrong and Gladstone Land

The main advantage of trading using opposite Hannon Armstrong and Gladstone Land positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hannon Armstrong 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 Hannon Armstrong Sustainable and Gladstone Land 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.