Correlation Between Warehouses and GLADSTONE LAND
Can any of the company-specific risk be diversified away by investing in both Warehouses 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 Warehouses and GLADSTONE LAND into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Warehouses De Pauw and GLADSTONE LAND L 001, you can compare the effects of market volatilities on Warehouses 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 Warehouses with a short position of GLADSTONE LAND. Check out your portfolio center. Please also check ongoing floating volatility patterns of Warehouses and GLADSTONE LAND.
Diversification Opportunities for Warehouses and GLADSTONE LAND
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Warehouses and GLADSTONE is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Warehouses De Pauw and GLADSTONE LAND L 001 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GLADSTONE LAND L and Warehouses 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 Warehouses De Pauw 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 L has no effect on the direction of Warehouses i.e., Warehouses and GLADSTONE LAND go up and down completely randomly.
Pair Corralation between Warehouses and GLADSTONE LAND
Assuming the 90 days trading horizon Warehouses De Pauw is expected to under-perform the GLADSTONE LAND. But the stock apears to be less risky and, when comparing its historical volatility, Warehouses De Pauw is 1.14 times less risky than GLADSTONE LAND. The stock trades about -0.04 of its potential returns per unit of risk. The GLADSTONE LAND L 001 is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 1,248 in GLADSTONE LAND L 001 on September 15, 2024 and sell it today you would lose (183.00) from holding GLADSTONE LAND L 001 or give up 14.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Warehouses De Pauw vs. GLADSTONE LAND L 001
Performance |
| Timeline |
| Warehouses De Pauw |
| GLADSTONE LAND L |
Warehouses and GLADSTONE LAND Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Warehouses and GLADSTONE LAND
The main advantage of trading using opposite Warehouses and GLADSTONE LAND positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Warehouses 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.| Warehouses vs. Extra Space Storage | Warehouses vs. REXFORD INDREALTY DL 01 | Warehouses vs. CubeSmart | Warehouses vs. First Industrial Realty |
| GLADSTONE LAND vs. Extra Space Storage | GLADSTONE LAND vs. REXFORD INDREALTY DL 01 | GLADSTONE LAND vs. CubeSmart | GLADSTONE LAND 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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