Correlation Between Gladstone Commercial and Crombie Real

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

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

Diversification Opportunities for Gladstone Commercial and Crombie Real

-0.01

Correlation Coefficient

Gladstone Commercial  Crombie Real

Good diversification

The 3 months correlation between Gladstone and Crombie is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Gladstone Commercial and Crombie Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crombie Real Estate and Gladstone Commercial 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 Commercial are associated (or correlated) with Crombie Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crombie Real Estate has no effect on the direction of Gladstone Commercial i.e., Gladstone Commercial and Crombie Real go up and down completely randomly.

Pair Corralation between Gladstone Commercial and Crombie Real

Given the investment horizon of 90 days Gladstone Commercial is expected to under-perform the Crombie Real. But the stock apears to be less risky and, when comparing its historical volatility, Gladstone Commercial is 1.41 times less risky than Crombie Real. The stock trades about -0.08 of its potential returns per unit of risk. The Crombie Real Estate is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  1,009  in Crombie Real Estate on December 2, 2024 and sell it today you would lose (23.00) from holding Crombie Real Estate or give up 2.28% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	72.13%
Values	Daily Returns

Gladstone Commercial  vs.  Crombie Real Estate

Gladstone Commercial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gladstone Commercial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Gladstone Commercial is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Crombie Real Estate

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Gladstone Commercial and Crombie Real

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

The idea behind Gladstone Commercial and Crombie Real Estate 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.