Correlation Between Gladstone Commercial and Presidio Property

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

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

Diversification Opportunities for Gladstone Commercial and Presidio Property

-0.26

Correlation Coefficient

Gladstone Commercial  Presidio Property

Very good diversification

The 3 months correlation between Gladstone and Presidio is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Gladstone Commercial Corp and Presidio Property Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Presidio Property Trust 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 Corp are associated (or correlated) with Presidio Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Presidio Property Trust has no effect on the direction of Gladstone Commercial i.e., Gladstone Commercial and Presidio Property go up and down completely randomly.

Pair Corralation between Gladstone Commercial and Presidio Property

Assuming the 90 days horizon Gladstone Commercial Corp is expected to under-perform the Presidio Property. But the preferred stock apears to be less risky and, when comparing its historical volatility, Gladstone Commercial Corp is 2.17 times less risky than Presidio Property. The preferred stock trades about -0.08 of its potential returns per unit of risk. The Presidio Property Trust is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  1,314  in Presidio Property Trust on November 29, 2024 and sell it today you would earn a total of  236.00  from holding Presidio Property Trust or generate 17.96% return on investment over 90 days.

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

Gladstone Commercial Corp  vs.  Presidio Property Trust

Gladstone Commercial Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gladstone Commercial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Gladstone Commercial is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Presidio Property Trust

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Presidio Property Trust are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Presidio Property reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gladstone Commercial and Presidio Property

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

The idea behind Gladstone Commercial Corp and Presidio Property Trust 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.