Correlation Between GLADSTONE LAND and Extra Space

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

Diversification Opportunities for GLADSTONE LAND and Extra Space

0.44

Correlation Coefficient

GLADSTONE LAND  Extra Space

Very weak diversification

The 3 months correlation between GLADSTONE and Extra is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding GLADSTONE LAND L 001 and Extra Space Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Extra Space Storage 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 Extra Space. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Extra Space Storage has no effect on the direction of GLADSTONE LAND i.e., GLADSTONE LAND and Extra Space go up and down completely randomly.

Pair Corralation between GLADSTONE LAND and Extra Space

Assuming the 90 days horizon GLADSTONE LAND L 001 is expected to under-perform the Extra Space. In addition to that, GLADSTONE LAND is 1.05 times more volatile than Extra Space Storage. It trades about -0.21 of its total potential returns per unit of risk. Extra Space Storage is currently generating about -0.1 per unit of volatility. If you would invest  15,605  in Extra Space Storage on September 26, 2024 and sell it today you would lose (1,450) from holding Extra Space Storage or give up 9.29% of portfolio value over 90 days.

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

GLADSTONE LAND L 001  vs.  Extra Space Storage

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.

Extra Space Storage

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Extra Space Storage has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with GLADSTONE LAND and Extra Space

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

The idea behind GLADSTONE LAND L 001 and Extra Space Storage 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.