Correlation Between Safehold and Gladstone Commercial

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

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

Diversification Opportunities for Safehold and Gladstone Commercial

0.11

Correlation Coefficient

Safehold  Gladstone Commercial

Average diversification

The 3 months correlation between Safehold and Gladstone is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Safehold and Gladstone Commercial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gladstone Commercial Corp and Safehold 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 Safehold are associated (or correlated) with Gladstone Commercial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gladstone Commercial Corp has no effect on the direction of Safehold i.e., Safehold and Gladstone Commercial go up and down completely randomly.

Pair Corralation between Safehold and Gladstone Commercial

Given the investment horizon of 90 days Safehold is expected to under-perform the Gladstone Commercial. In addition to that, Safehold is 2.93 times more volatile than Gladstone Commercial Corp. It trades about 0.0 of its total potential returns per unit of risk. Gladstone Commercial Corp is currently generating about 0.05 per unit of volatility. If you would invest  2,218  in Gladstone Commercial Corp on December 31, 2024 and sell it today you would earn a total of  56.00  from holding Gladstone Commercial Corp or generate 2.52% return on investment over 90 days.

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

Safehold  vs.  Gladstone Commercial Corp

Safehold

Risk-Adjusted Performance

Very Weak

Over the last 90 days Safehold has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Safehold is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Gladstone Commercial Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gladstone Commercial Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. 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.

Pair Trading with Safehold and Gladstone Commercial

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

The idea behind Safehold and Gladstone Commercial Corp 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.