Correlation Between Realty Income and Gladstone Land

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

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

Diversification Opportunities for Realty Income and Gladstone Land

-0.17

Correlation Coefficient

Realty Income  Gladstone Land

Good diversification

The 3 months correlation between Realty and Gladstone is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Realty Income and Gladstone Land in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gladstone Land and Realty Income 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 Realty Income 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 has no effect on the direction of Realty Income i.e., Realty Income and Gladstone Land go up and down completely randomly.

Pair Corralation between Realty Income and Gladstone Land

Taking into account the 90-day investment horizon Realty Income is expected to generate 0.76 times more return on investment than Gladstone Land. However, Realty Income is 1.31 times less risky than Gladstone Land. It trades about 0.12 of its potential returns per unit of risk. Gladstone Land is currently generating about 0.01 per unit of risk. If you would invest  5,197  in Realty Income on December 28, 2024 and sell it today you would earn a total of  464.00  from holding Realty Income or generate 8.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Realty Income  vs.  Gladstone Land

Realty Income

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Realty Income are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Realty Income may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Gladstone Land

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Gladstone Land are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, Gladstone Land is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Realty Income and Gladstone Land

The main advantage of trading using opposite Realty Income and Gladstone Land positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Realty Income 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 Realty Income and Gladstone Land 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.