Correlation Between First Industrial and Gladstone Land
Can any of the company-specific risk be diversified away by investing in both First Industrial 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 First Industrial and Gladstone Land into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Industrial Realty and Gladstone Land, you can compare the effects of market volatilities on First Industrial 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 First Industrial with a short position of Gladstone Land. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Industrial and Gladstone Land.
Diversification Opportunities for First Industrial and Gladstone Land
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Gladstone is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding First Industrial Realty and Gladstone Land in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gladstone Land and First Industrial 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 First Industrial Realty 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 First Industrial i.e., First Industrial and Gladstone Land go up and down completely randomly.
Pair Corralation between First Industrial and Gladstone Land
Allowing for the 90-day total investment horizon First Industrial Realty is expected to generate 0.68 times more return on investment than Gladstone Land. However, First Industrial Realty is 1.47 times less risky than Gladstone Land. It trades about 0.06 of its potential returns per unit of risk. Gladstone Land is currently generating about -0.28 per unit of risk. If you would invest 5,340 in First Industrial Realty on August 31, 2024 and sell it today you would earn a total of 68.00 from holding First Industrial Realty or generate 1.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
First Industrial Realty vs. Gladstone Land
Performance |
| Timeline |
| First Industrial Realty |
| Gladstone Land |
First Industrial and Gladstone Land Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Industrial and Gladstone Land
The main advantage of trading using opposite First Industrial and Gladstone Land positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Industrial 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.| First Industrial vs. LXP Industrial Trust | First Industrial vs. Plymouth Industrial REIT | First Industrial vs. Global Self Storage | First Industrial vs. Terreno Realty |
| Gladstone Land vs. Farmland Partners | Gladstone Land vs. STAG Industrial | Gladstone Land vs. Gladstone Commercial | Gladstone Land vs. LTC Properties |
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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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