Correlation Between American Tower and Acadia Realty
Can any of the company-specific risk be diversified away by investing in both American Tower and Acadia Realty 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 Acadia Realty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Tower Corp and Acadia Realty Trust, you can compare the effects of market volatilities on American Tower and Acadia Realty 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 Acadia Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Tower and Acadia Realty.
Diversification Opportunities for American Tower and Acadia Realty
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Acadia is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding American Tower Corp and Acadia Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acadia Realty Trust 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 Corp are associated (or correlated) with Acadia Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acadia Realty Trust has no effect on the direction of American Tower i.e., American Tower and Acadia Realty go up and down completely randomly.
Pair Corralation between American Tower and Acadia Realty
Considering the 90-day investment horizon American Tower Corp is expected to generate 0.73 times more return on investment than Acadia Realty. However, American Tower Corp is 1.36 times less risky than Acadia Realty. It trades about 0.01 of its potential returns per unit of risk. Acadia Realty Trust is currently generating about -0.09 per unit of risk. If you would invest 19,204 in American Tower Corp on November 27, 2024 and sell it today you would lose (4.00) from holding American Tower Corp or give up 0.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Tower Corp vs. Acadia Realty Trust
Performance |
| Timeline |
| American Tower Corp |
| Acadia Realty Trust |
American Tower and Acadia Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Tower and Acadia Realty
The main advantage of trading using opposite American Tower and Acadia Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Tower position performs unexpectedly, Acadia Realty 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 Acadia Realty will offset losses from the drop in Acadia Realty's long position.| American Tower vs. Digital Realty Trust | American Tower vs. Equinix | American Tower vs. SBA Communications Corp | American Tower vs. Iron Mountain Incorporated |
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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