Correlation Between Alphabet and American Tower
Can any of the company-specific risk be diversified away by investing in both Alphabet and American Tower 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 Alphabet and American Tower into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alphabet and American Tower, you can compare the effects of market volatilities on Alphabet and American Tower 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 Alphabet with a short position of American Tower. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alphabet and American Tower.
Diversification Opportunities for Alphabet and American Tower
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Alphabet and American is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet and American Tower in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Tower and Alphabet 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 Alphabet are associated (or correlated) with American Tower. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Tower has no effect on the direction of Alphabet i.e., Alphabet and American Tower go up and down completely randomly.
Pair Corralation between Alphabet and American Tower
Assuming the 90 days trading horizon Alphabet is expected to generate 0.74 times more return on investment than American Tower. However, Alphabet is 1.35 times less risky than American Tower. It trades about 0.14 of its potential returns per unit of risk. American Tower is currently generating about 0.01 per unit of risk. If you would invest 7,534 in Alphabet on August 30, 2024 and sell it today you would earn a total of 795.00 from holding Alphabet or generate 10.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 97.62% |
| Values | Daily Returns |
Alphabet vs. American Tower
Performance |
| Timeline |
| Alphabet |
| American Tower |
Alphabet and American Tower Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alphabet and American Tower
The main advantage of trading using opposite Alphabet and American Tower positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alphabet position performs unexpectedly, American Tower 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 American Tower will offset losses from the drop in American Tower's long position.| Alphabet vs. The Trade Desk | Alphabet vs. HDFC Bank Limited | Alphabet vs. Charter Communications | Alphabet vs. Extra Space Storage |
| American Tower vs. Equinix | American Tower vs. Iron Mountain Incorporated | American Tower vs. CA Modas SA | American Tower vs. Banco do Estado |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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