Correlation Between GLADSTONE LAND and Warehouses
Can any of the company-specific risk be diversified away by investing in both GLADSTONE LAND and Warehouses 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 LAND and Warehouses into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GLADSTONE LAND L 001 and Warehouses De Pauw, you can compare the effects of market volatilities on GLADSTONE LAND and Warehouses 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 LAND with a short position of Warehouses. Check out your portfolio center. Please also check ongoing floating volatility patterns of GLADSTONE LAND and Warehouses.
Diversification Opportunities for GLADSTONE LAND and Warehouses
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between GLADSTONE and Warehouses is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding GLADSTONE LAND L 001 and Warehouses De Pauw in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Warehouses De Pauw and GLADSTONE LAND 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 LAND L 001 are associated (or correlated) with Warehouses. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Warehouses De Pauw has no effect on the direction of GLADSTONE LAND i.e., GLADSTONE LAND and Warehouses go up and down completely randomly.
Pair Corralation between GLADSTONE LAND and Warehouses
Assuming the 90 days horizon GLADSTONE LAND L 001 is expected to under-perform the Warehouses. In addition to that, GLADSTONE LAND is 1.2 times more volatile than Warehouses De Pauw. It trades about -0.21 of its total potential returns per unit of risk. Warehouses De Pauw is currently generating about -0.1 per unit of volatility. If you would invest 2,040 in Warehouses De Pauw on September 13, 2024 and sell it today you would lose (65.00) from holding Warehouses De Pauw or give up 3.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
GLADSTONE LAND L 001 vs. Warehouses De Pauw
Performance |
| Timeline |
| GLADSTONE LAND L |
| Warehouses De Pauw |
GLADSTONE LAND and Warehouses Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GLADSTONE LAND and Warehouses
The main advantage of trading using opposite GLADSTONE LAND and Warehouses positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GLADSTONE LAND position performs unexpectedly, Warehouses 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 Warehouses will offset losses from the drop in Warehouses' long position.| GLADSTONE LAND vs. Extra Space Storage | GLADSTONE LAND vs. REXFORD INDREALTY DL 01 | GLADSTONE LAND vs. CubeSmart | GLADSTONE LAND vs. First Industrial Realty |
| Warehouses vs. Extra Space Storage | Warehouses vs. REXFORD INDREALTY DL 01 | Warehouses vs. CubeSmart | Warehouses vs. First Industrial Realty |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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