Correlation Between PROSIEBENSAT1 MEDIADR4/ and GLADSTONE LAND

Can any of the company-specific risk be diversified away by investing in both PROSIEBENSAT1 MEDIADR4/ 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 PROSIEBENSAT1 MEDIADR4/ and GLADSTONE LAND into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PROSIEBENSAT1 MEDIADR4 and GLADSTONE LAND L 001, you can compare the effects of market volatilities on PROSIEBENSAT1 MEDIADR4/ 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 PROSIEBENSAT1 MEDIADR4/ with a short position of GLADSTONE LAND. Check out your portfolio center. Please also check ongoing floating volatility patterns of PROSIEBENSAT1 MEDIADR4/ and GLADSTONE LAND.

Diversification Opportunities for PROSIEBENSAT1 MEDIADR4/ and GLADSTONE LAND

0.22

Correlation Coefficient

PROSIEBENSAT1 MEDIADR4/  GLADSTONE LAND

Modest diversification

The 3 months correlation between PROSIEBENSAT1 and GLADSTONE is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding PROSIEBENSAT1 MEDIADR4 and GLADSTONE LAND L 001 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GLADSTONE LAND L and PROSIEBENSAT1 MEDIADR4/ 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 PROSIEBENSAT1 MEDIADR4 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 L has no effect on the direction of PROSIEBENSAT1 MEDIADR4/ i.e., PROSIEBENSAT1 MEDIADR4/ and GLADSTONE LAND go up and down completely randomly.

Pair Corralation between PROSIEBENSAT1 MEDIADR4/ and GLADSTONE LAND

Assuming the 90 days trading horizon PROSIEBENSAT1 MEDIADR4/ is expected to generate 4.01 times less return on investment than GLADSTONE LAND. In addition to that, PROSIEBENSAT1 MEDIADR4/ is 1.41 times more volatile than GLADSTONE LAND L 001. It trades about 0.03 of its total potential returns per unit of risk. GLADSTONE LAND L 001 is currently generating about 0.18 per unit of volatility. If you would invest  995.00  in GLADSTONE LAND L 001 on October 23, 2024 and sell it today you would earn a total of  55.00  from holding GLADSTONE LAND L 001 or generate 5.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	94.12%
Values	Daily Returns

PROSIEBENSAT1 MEDIADR4  vs.  GLADSTONE LAND L 001

PROSIEBENSAT1 MEDIADR4/

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PROSIEBENSAT1 MEDIADR4 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's primary indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

GLADSTONE LAND L

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GLADSTONE LAND L 001 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with PROSIEBENSAT1 MEDIADR4/ and GLADSTONE LAND

The main advantage of trading using opposite PROSIEBENSAT1 MEDIADR4/ and GLADSTONE LAND positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PROSIEBENSAT1 MEDIADR4/ 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 PROSIEBENSAT1 MEDIADR4 and GLADSTONE LAND L 001 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.