Correlation Between Gladstone Commercial and Modiv

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

By analyzing existing cross correlation between Gladstone Commercial and Modiv Inc, you can compare the effects of market volatilities on Gladstone Commercial and Modiv 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 Modiv. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gladstone Commercial and Modiv.

Diversification Opportunities for Gladstone Commercial and Modiv

-0.48

Correlation Coefficient

Gladstone Commercial  Modiv

Very good diversification

The 3 months correlation between Gladstone and Modiv is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Gladstone Commercial and Modiv Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Modiv Inc 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 Modiv. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Modiv Inc has no effect on the direction of Gladstone Commercial i.e., Gladstone Commercial and Modiv go up and down completely randomly.

Pair Corralation between Gladstone Commercial and Modiv

Given the investment horizon of 90 days Gladstone Commercial is expected to under-perform the Modiv. But the stock apears to be less risky and, when comparing its historical volatility, Gladstone Commercial is 1.85 times less risky than Modiv. The stock trades about -0.09 of its potential returns per unit of risk. The Modiv Inc is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,465  in Modiv Inc on December 29, 2024 and sell it today you would earn a total of  111.00  from holding Modiv Inc or generate 7.58% return on investment over 90 days.

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

Gladstone Commercial  vs.  Modiv Inc

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.

Modiv Inc

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Modiv Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain fundamental indicators, Modiv may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Gladstone Commercial and Modiv

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

The idea behind Gladstone Commercial and Modiv Inc 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.