Correlation Between American Tower and Newlake Capital
Can any of the company-specific risk be diversified away by investing in both American Tower and Newlake Capital 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 Newlake Capital 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 Newlake Capital Partners, you can compare the effects of market volatilities on American Tower and Newlake Capital 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 Newlake Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Tower and Newlake Capital.
Diversification Opportunities for American Tower and Newlake Capital
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Newlake is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding American Tower Corp and Newlake Capital Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newlake Capital Partners 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 Newlake Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newlake Capital Partners has no effect on the direction of American Tower i.e., American Tower and Newlake Capital go up and down completely randomly.
Pair Corralation between American Tower and Newlake Capital
Considering the 90-day investment horizon American Tower Corp is expected to under-perform the Newlake Capital. In addition to that, American Tower is 1.22 times more volatile than Newlake Capital Partners. It trades about -0.14 of its total potential returns per unit of risk. Newlake Capital Partners is currently generating about -0.16 per unit of volatility. If you would invest 1,918 in Newlake Capital Partners on October 25, 2024 and sell it today you would lose (273.00) from holding Newlake Capital Partners or give up 14.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Tower Corp vs. Newlake Capital Partners
Performance |
| Timeline |
| American Tower Corp |
| Newlake Capital Partners |
American Tower and Newlake Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Tower and Newlake Capital
The main advantage of trading using opposite American Tower and Newlake Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Tower position performs unexpectedly, Newlake Capital 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 Newlake Capital will offset losses from the drop in Newlake Capital'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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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