Correlation Between NYSE Composite and American Tower
Can any of the company-specific risk be diversified away by investing in both NYSE Composite 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 NYSE Composite and American Tower into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and American Tower Corp, you can compare the effects of market volatilities on NYSE Composite 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 NYSE Composite with a short position of American Tower. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and American Tower.
Diversification Opportunities for NYSE Composite and American Tower
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NYSE and American is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and American Tower Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Tower Corp and NYSE Composite 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 NYSE Composite 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 Corp has no effect on the direction of NYSE Composite i.e., NYSE Composite and American Tower go up and down completely randomly.
Pair Corralation between NYSE Composite and American Tower
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.44 times more return on investment than American Tower. However, NYSE Composite is 2.28 times less risky than American Tower. It trades about 0.13 of its potential returns per unit of risk. American Tower Corp is currently generating about 0.01 per unit of risk. If you would invest 1,626,375 in NYSE Composite on August 27, 2024 and sell it today you would earn a total of 385,970 from holding NYSE Composite or generate 23.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. American Tower Corp
Performance |
| Timeline |
NYSE Composite and American Tower Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
American Tower Corp
Pair trading matchups for American Tower
Pair Trading with NYSE Composite and American Tower
The main advantage of trading using opposite NYSE Composite and American Tower positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite 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.| NYSE Composite vs. Grocery Outlet Holding | NYSE Composite vs. Tencent Music Entertainment | NYSE Composite vs. SunLink Health Systems | NYSE Composite vs. Getty Realty |
| American Tower vs. Digital Realty Trust | American Tower vs. Equinix | American Tower vs. SBA Communications Corp | American Tower vs. Iron Mountain Incorporated |
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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