Correlation Between SBA Communications and Gladstone Land

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

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

Diversification Opportunities for SBA Communications and Gladstone Land

0.5

Correlation Coefficient

SBA Communications  Gladstone Land

Very weak diversification

The 3 months correlation between SBA and Gladstone is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding SBA Communications Corp and Gladstone Land in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gladstone Land and SBA Communications 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 SBA Communications Corp 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 SBA Communications i.e., SBA Communications and Gladstone Land go up and down completely randomly.

Pair Corralation between SBA Communications and Gladstone Land

Given the investment horizon of 90 days SBA Communications Corp is expected to generate 0.85 times more return on investment than Gladstone Land. However, SBA Communications Corp is 1.18 times less risky than Gladstone Land. It trades about 0.08 of its potential returns per unit of risk. Gladstone Land is currently generating about 0.02 per unit of risk. If you would invest  20,228  in SBA Communications Corp on December 28, 2024 and sell it today you would earn a total of  1,456  from holding SBA Communications Corp or generate 7.2% return on investment over 90 days.

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

SBA Communications Corp  vs.  Gladstone Land

SBA Communications Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SBA Communications Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, SBA Communications may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Gladstone Land

Risk-Adjusted Performance

Very 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. In spite of rather sound basic indicators, Gladstone Land is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with SBA Communications and Gladstone Land

The main advantage of trading using opposite SBA Communications and Gladstone Land positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBA Communications 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 SBA Communications Corp 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 Transaction History module to view history of all your transactions and understand their impact on performance.