Correlation Between Gladstone Land and American Tower
Can any of the company-specific risk be diversified away by investing in both Gladstone Land and American Tower 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 American Tower into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gladstone Land and American Tower Corp, you can compare the effects of market volatilities on Gladstone Land and American Tower 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 American Tower. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gladstone Land and American Tower.
Diversification Opportunities for Gladstone Land and American Tower
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Gladstone and American is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Gladstone Land and American Tower Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Tower Corp 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 are associated (or correlated) with American Tower. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Tower Corp has no effect on the direction of Gladstone Land i.e., Gladstone Land and American Tower go up and down completely randomly.
Pair Corralation between Gladstone Land and American Tower
Given the investment horizon of 90 days Gladstone Land is expected to under-perform the American Tower. But the stock apears to be less risky and, when comparing its historical volatility, Gladstone Land is 1.4 times less risky than American Tower. The stock trades about -0.28 of its potential returns per unit of risk. The American Tower Corp is currently generating about -0.17 of returns per unit of risk over similar time horizon. If you would invest 22,222 in American Tower Corp on August 27, 2024 and sell it today you would lose (1,791) from holding American Tower Corp or give up 8.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gladstone Land vs. American Tower Corp
Performance |
| Timeline |
| Gladstone Land |
| American Tower Corp |
Gladstone Land and American Tower Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gladstone Land and American Tower
The main advantage of trading using opposite Gladstone Land and American Tower positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gladstone Land position performs unexpectedly, American Tower 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 American Tower will offset losses from the drop in American Tower's long position.| Gladstone Land vs. Farmland Partners | Gladstone Land vs. STAG Industrial | Gladstone Land vs. Gladstone Commercial | Gladstone Land vs. LTC Properties |
| American Tower vs. Digital Realty Trust | American Tower vs. Equinix | American Tower vs. SBA Communications Corp | American Tower vs. Iron Mountain Incorporated |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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