April 30, 2020

Farmland's Correlation to Major Asset Classes (Video)


Video Transcript

So this slide may be a little confusing at first so I'll take a moment here.

This is each of these asset's correlation to farmland. So for each one of these lines here, you can think of them as, in the first one for example, timberland versus farmland, and then the Dow Jones REIT index versus farmland.

Even a moderate statistical relationship, or correlation coefficient, is a 0.6 and 0.8 is a strong correlation. Here we don't see any of that.

In fact, with the S&P there in the middle, you see almost exactly zero correlation and the same with REIT returns and just very little correlation with the rest of these asset classes.

Again that's what we're excited about with farmland is portfolio diversification.

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Note: The information above is not intended as investment advice. Past performance is no guarantee of future results. For additional risk disclosures regarding farmland investing and the risks of investing on AcreTrader, please see individual farm offering pages as well as our terms and conditions.