Correlation Between American Tower and TR Property
Can any of the company-specific risk be diversified away by investing in both American Tower and TR Property 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 American Tower and TR Property into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Tower REIT and TR Property Investment, you can compare the effects of market volatilities on American Tower and TR Property 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 American Tower with a short position of TR Property. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Tower and TR Property.
Diversification Opportunities for American Tower and TR Property
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and TRY is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding American Tower REIT and TR Property Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TR Property Investment and American Tower 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 American Tower REIT are associated (or correlated) with TR Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TR Property Investment has no effect on the direction of American Tower i.e., American Tower and TR Property go up and down completely randomly.
Pair Corralation between American Tower and TR Property
Assuming the 90 days trading horizon American Tower REIT is expected to generate 1.83 times more return on investment than TR Property. However, American Tower is 1.83 times more volatile than TR Property Investment. It trades about 0.19 of its potential returns per unit of risk. TR Property Investment is currently generating about 0.02 per unit of risk. If you would invest 18,765 in American Tower REIT on November 29, 2024 and sell it today you would earn a total of 1,298 from holding American Tower REIT or generate 6.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Tower REIT vs. TR Property Investment
Performance |
| Timeline |
| American Tower REIT |
| TR Property Investment |
American Tower and TR Property Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Tower and TR Property
The main advantage of trading using opposite American Tower and TR Property positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Tower position performs unexpectedly, TR Property 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 TR Property will offset losses from the drop in TR Property's long position.| American Tower vs. Aberdeen Diversified Income | American Tower vs. Auction Technology Group | American Tower vs. Cognizant Technology Solutions | American Tower vs. Sunny Optical Technology |
| TR Property vs. EJF Investments | TR Property vs. Kinnevik Investment AB | TR Property vs. Eastinco Mining Exploration | TR Property vs. Smithson Investment Trust |
Check out your portfolio center.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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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