Correlation Between EPR Properties and Gladstone Land

Can any of the company-specific risk be diversified away by investing in both EPR Properties 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 EPR Properties and Gladstone Land into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between EPR Properties and Gladstone Land Corp, you can compare the effects of market volatilities on EPR Properties 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 EPR Properties with a short position of Gladstone Land. Check out your portfolio center. Please also check ongoing floating volatility patterns of EPR Properties and Gladstone Land.

Diversification Opportunities for EPR Properties and Gladstone Land

0.18

Correlation Coefficient

EPR Properties  Gladstone Land

Average diversification

The 3 months correlation between EPR and Gladstone is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding EPR Properties and Gladstone Land Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gladstone Land Corp and EPR Properties 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 EPR Properties 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 Corp has no effect on the direction of EPR Properties i.e., EPR Properties and Gladstone Land go up and down completely randomly.

Pair Corralation between EPR Properties and Gladstone Land

Assuming the 90 days trading horizon EPR Properties is expected to generate 1.08 times more return on investment than Gladstone Land. However, EPR Properties is 1.08 times more volatile than Gladstone Land Corp. It trades about 0.19 of its potential returns per unit of risk. Gladstone Land Corp is currently generating about 0.02 per unit of risk. If you would invest  2,064  in EPR Properties on December 29, 2024 and sell it today you would earn a total of  260.00  from holding EPR Properties or generate 12.6% return on investment over 90 days.

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

EPR Properties  vs.  Gladstone Land Corp

EPR Properties

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in EPR Properties are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, EPR Properties exhibited solid returns over the last few months and may actually be approaching a breakup point.

Gladstone Land Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Gladstone Land Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Gladstone Land is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with EPR Properties and Gladstone Land

The main advantage of trading using opposite EPR Properties and Gladstone Land positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EPR Properties 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.

The idea behind EPR Properties and Gladstone Land Corp 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.