Correlation Between American Tower and Outfront Media
Can any of the company-specific risk be diversified away by investing in both American Tower and Outfront Media 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 Outfront Media 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 Outfront Media, you can compare the effects of market volatilities on American Tower and Outfront Media 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 Outfront Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Tower and Outfront Media.
Diversification Opportunities for American Tower and Outfront Media
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Outfront is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding American Tower Corp and Outfront Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Outfront Media 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 Outfront Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Outfront Media has no effect on the direction of American Tower i.e., American Tower and Outfront Media go up and down completely randomly.
Pair Corralation between American Tower and Outfront Media
Considering the 90-day investment horizon American Tower Corp is expected to generate 1.01 times more return on investment than Outfront Media. However, American Tower is 1.01 times more volatile than Outfront Media. It trades about 0.15 of its potential returns per unit of risk. Outfront Media is currently generating about 0.13 per unit of risk. If you would invest 17,919 in American Tower Corp on November 9, 2024 and sell it today you would earn a total of 1,056 from holding American Tower Corp or generate 5.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Tower Corp vs. Outfront Media
Performance |
| Timeline |
| American Tower Corp |
| Outfront Media |
American Tower and Outfront Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Tower and Outfront Media
The main advantage of trading using opposite American Tower and Outfront Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Tower position performs unexpectedly, Outfront Media 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 Outfront Media will offset losses from the drop in Outfront Media'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 |
| Outfront Media vs. PotlatchDeltic Corp | Outfront Media vs. Gaming Leisure Properties | Outfront Media vs. Rayonier | Outfront Media vs. Weyerhaeuser |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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