Correlation Between Welltower and American Tower
Can any of the company-specific risk be diversified away by investing in both Welltower 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 Welltower and American Tower into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Welltower and American Tower Corp, you can compare the effects of market volatilities on Welltower 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 Welltower with a short position of American Tower. Check out your portfolio center. Please also check ongoing floating volatility patterns of Welltower and American Tower.
Diversification Opportunities for Welltower and American Tower
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Welltower and American is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Welltower 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 Welltower 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 Welltower 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 Welltower i.e., Welltower and American Tower go up and down completely randomly.
Pair Corralation between Welltower and American Tower
Given the investment horizon of 90 days Welltower is expected to generate 0.61 times more return on investment than American Tower. However, Welltower is 1.65 times less risky than American Tower. It trades about 0.08 of its potential returns per unit of risk. American Tower Corp is currently generating about -0.03 per unit of risk. If you would invest 13,666 in Welltower on August 30, 2024 and sell it today you would earn a total of 264.00 from holding Welltower or generate 1.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Welltower vs. American Tower Corp
Performance |
| Timeline |
| Welltower |
| American Tower Corp |
Welltower and American Tower Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Welltower and American Tower
The main advantage of trading using opposite Welltower and American Tower positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Welltower 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.| Welltower vs. Boston Properties | Welltower vs. Douglas Emmett | Welltower vs. Kilroy Realty Corp | Welltower vs. Alexandria Real Estate |
| 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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