Correlation Between GLADSTONE LAND and REXFORD INDREALTY

Can any of the company-specific risk be diversified away by investing in both GLADSTONE LAND and REXFORD INDREALTY 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 REXFORD INDREALTY 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 REXFORD INDREALTY DL 01, you can compare the effects of market volatilities on GLADSTONE LAND and REXFORD INDREALTY 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 REXFORD INDREALTY. Check out your portfolio center. Please also check ongoing floating volatility patterns of GLADSTONE LAND and REXFORD INDREALTY.

Diversification Opportunities for GLADSTONE LAND and REXFORD INDREALTY

0.76

Correlation Coefficient

GLADSTONE LAND  REXFORD INDREALTY

Poor diversification

The 3 months correlation between GLADSTONE and REXFORD is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding GLADSTONE LAND L 001 and REXFORD INDREALTY DL 01 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REXFORD INDREALTY 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 REXFORD INDREALTY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REXFORD INDREALTY has no effect on the direction of GLADSTONE LAND i.e., GLADSTONE LAND and REXFORD INDREALTY go up and down completely randomly.

Pair Corralation between GLADSTONE LAND and REXFORD INDREALTY

Assuming the 90 days horizon GLADSTONE LAND L 001 is expected to under-perform the REXFORD INDREALTY. But the stock apears to be less risky and, when comparing its historical volatility, GLADSTONE LAND L 001 is 1.22 times less risky than REXFORD INDREALTY. The stock trades about -0.21 of its potential returns per unit of risk. The REXFORD INDREALTY DL 01 is currently generating about -0.16 of returns per unit of risk over similar time horizon. If you would invest  4,460  in REXFORD INDREALTY DL 01 on September 28, 2024 and sell it today you would lose (780.00) from holding REXFORD INDREALTY DL 01 or give up 17.49% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

GLADSTONE LAND L 001  vs.  REXFORD INDREALTY DL 01

GLADSTONE LAND L

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GLADSTONE LAND L 001 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

REXFORD INDREALTY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days REXFORD INDREALTY DL 01 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with GLADSTONE LAND and REXFORD INDREALTY

The main advantage of trading using opposite GLADSTONE LAND and REXFORD INDREALTY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GLADSTONE LAND position performs unexpectedly, REXFORD INDREALTY 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 REXFORD INDREALTY will offset losses from the drop in REXFORD INDREALTY's long position.

The idea behind GLADSTONE LAND L 001 and REXFORD INDREALTY DL 01 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.