Correlation Between Gladstone Land and Exxon

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

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

Diversification Opportunities for Gladstone Land and Exxon

-0.63

Correlation Coefficient

Gladstone Land  Exxon

Excellent diversification

The 3 months correlation between Gladstone and Exxon is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Gladstone Land and Exxon Mobil Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exxon Mobil Corp 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 Exxon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exxon Mobil Corp has no effect on the direction of Gladstone Land i.e., Gladstone Land and Exxon go up and down completely randomly.

Pair Corralation between Gladstone Land and Exxon

Given the investment horizon of 90 days Gladstone Land is expected to under-perform the Exxon. In addition to that, Gladstone Land is 2.15 times more volatile than Exxon Mobil Corp. It trades about -0.14 of its total potential returns per unit of risk. Exxon Mobil Corp is currently generating about 0.28 per unit of volatility. If you would invest  11,299  in Exxon Mobil Corp on January 20, 2024 and sell it today you would earn a total of  553.00  from holding Exxon Mobil Corp or generate 4.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Gladstone Land  vs.  Exxon Mobil Corp

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 latest inconsistent performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Exxon Mobil Corp

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Exxon Mobil Corp are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Exxon displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gladstone Land and Exxon

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

The idea behind Gladstone Land and Exxon Mobil 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.