Correlation Between GLADSTONE LAND and CubeSmart

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

Diversification Opportunities for GLADSTONE LAND and CubeSmart

0.29

Correlation Coefficient

GLADSTONE LAND  CubeSmart

Modest diversification

The 3 months correlation between GLADSTONE and CubeSmart is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding GLADSTONE LAND L 001 and CubeSmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CubeSmart 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 CubeSmart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CubeSmart has no effect on the direction of GLADSTONE LAND i.e., GLADSTONE LAND and CubeSmart go up and down completely randomly.

Pair Corralation between GLADSTONE LAND and CubeSmart

Assuming the 90 days horizon GLADSTONE LAND L 001 is expected to generate 1.55 times more return on investment than CubeSmart. However, GLADSTONE LAND is 1.55 times more volatile than CubeSmart. It trades about -0.03 of its potential returns per unit of risk. CubeSmart is currently generating about -0.07 per unit of risk. If you would invest  1,017  in GLADSTONE LAND L 001 on December 24, 2024 and sell it today you would lose (49.00) from holding GLADSTONE LAND L 001 or give up 4.82% of portfolio value over 90 days.

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

GLADSTONE LAND L 001  vs.  CubeSmart

GLADSTONE LAND L

Risk-Adjusted Performance

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 nearly stable basic indicators, GLADSTONE LAND is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

CubeSmart

Risk-Adjusted Performance

Very Weak

Over the last 90 days CubeSmart has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, CubeSmart is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with GLADSTONE LAND and CubeSmart

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

The idea behind GLADSTONE LAND L 001 and CubeSmart 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.