Correlation Between American Tower and Crown Castle
Can any of the company-specific risk be diversified away by investing in both American Tower and Crown Castle 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 Crown Castle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Tower and Crown Castle International, you can compare the effects of market volatilities on American Tower and Crown Castle 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 Crown Castle. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Tower and Crown Castle.
Diversification Opportunities for American Tower and Crown Castle
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Crown is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding American Tower and Crown Castle International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crown Castle Interna 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 are associated (or correlated) with Crown Castle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crown Castle Interna has no effect on the direction of American Tower i.e., American Tower and Crown Castle go up and down completely randomly.
Pair Corralation between American Tower and Crown Castle
Assuming the 90 days trading horizon American Tower is expected to generate 1.23 times more return on investment than Crown Castle. However, American Tower is 1.23 times more volatile than Crown Castle International. It trades about 0.09 of its potential returns per unit of risk. Crown Castle International is currently generating about 0.0 per unit of risk. If you would invest 4,730 in American Tower on November 28, 2024 and sell it today you would earn a total of 160.00 from holding American Tower or generate 3.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Tower vs. Crown Castle International
Performance |
| Timeline |
| American Tower |
| Crown Castle Interna |
American Tower and Crown Castle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Tower and Crown Castle
The main advantage of trading using opposite American Tower and Crown Castle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Tower position performs unexpectedly, Crown Castle 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 Crown Castle will offset losses from the drop in Crown Castle's long position.| American Tower vs. Fresenius Medical Care | American Tower vs. Bemobi Mobile Tech | American Tower vs. Guidewire Software, | American Tower vs. Delta Air Lines |
| Crown Castle vs. Monster Beverage | Crown Castle vs. LPL Financial Holdings | Crown Castle vs. Citizens Financial Group, | Crown Castle vs. Prudential Financial |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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