Correlation Between Gladstone Land and Newlake Capital

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

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

Diversification Opportunities for Gladstone Land and Newlake Capital

0.51

Correlation Coefficient

Gladstone Land  Newlake Capital

Very weak diversification

The 3 months correlation between Gladstone and Newlake is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Gladstone Land and Newlake Capital Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newlake Capital Partners 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 are associated (or correlated) with Newlake Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newlake Capital Partners has no effect on the direction of Gladstone Land i.e., Gladstone Land and Newlake Capital go up and down completely randomly.

Pair Corralation between Gladstone Land and Newlake Capital

Given the investment horizon of 90 days Gladstone Land is expected to under-perform the Newlake Capital. But the stock apears to be less risky and, when comparing its historical volatility, Gladstone Land is 1.17 times less risky than Newlake Capital. The stock trades about -0.05 of its potential returns per unit of risk. The Newlake Capital Partners is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,374  in Newlake Capital Partners on September 29, 2024 and sell it today you would earn a total of  396.00  from holding Newlake Capital Partners or generate 28.82% return on investment over 90 days.

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

Gladstone Land  vs.  Newlake Capital Partners

Gladstone Land

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gladstone Land has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Newlake Capital Partners

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Newlake Capital Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Even with fragile performance in the last few months, the Stock's fundamental indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Gladstone Land and Newlake Capital

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

The idea behind Gladstone Land and Newlake Capital Partners 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.

Check out your portfolio center.

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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.