Correlation Between Gladstone Commercial and LTC Properties
Can any of the company-specific risk be diversified away by investing in both Gladstone Commercial and LTC 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 LTC 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 LTC Properties, you can compare the effects of market volatilities on Gladstone Commercial and LTC 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 LTC Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gladstone Commercial and LTC Properties.
Diversification Opportunities for Gladstone Commercial and LTC Properties
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gladstone and LTC is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Gladstone Commercial and LTC Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LTC 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 LTC Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LTC Properties has no effect on the direction of Gladstone Commercial i.e., Gladstone Commercial and LTC Properties go up and down completely randomly.
Pair Corralation between Gladstone Commercial and LTC Properties
Given the investment horizon of 90 days Gladstone Commercial is expected to generate 2.16 times less return on investment than LTC Properties. But when comparing it to its historical volatility, Gladstone Commercial is 1.26 times less risky than LTC Properties. It trades about 0.03 of its potential returns per unit of risk. LTC Properties is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 3,384 in LTC Properties on November 2, 2024 and sell it today you would earn a total of 39.00 from holding LTC Properties or generate 1.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gladstone Commercial vs. LTC Properties
Performance |
| Timeline |
| Gladstone Commercial |
| LTC Properties |
Gladstone Commercial and LTC Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gladstone Commercial and LTC Properties
The main advantage of trading using opposite Gladstone Commercial and LTC Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gladstone Commercial position performs unexpectedly, LTC 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 LTC Properties will offset losses from the drop in LTC Properties' long position.| Gladstone Commercial vs. Gladstone Investment | Gladstone Commercial vs. Gladstone Capital | Gladstone Commercial vs. LTC Properties | Gladstone Commercial vs. Dynex Capital |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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