Correlation Between Crown Castle and Stockland

Can any of the company-specific risk be diversified away by investing in both Crown Castle and Stockland 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 Crown Castle and Stockland into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Crown Castle International and Stockland, you can compare the effects of market volatilities on Crown Castle and Stockland 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 Crown Castle with a short position of Stockland. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crown Castle and Stockland.

Diversification Opportunities for Crown Castle and Stockland

0.8

Correlation Coefficient

Crown Castle  Stockland

Very poor diversification

The 3 months correlation between Crown and Stockland is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Crown Castle International and Stockland in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stockland and Crown Castle 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 Crown Castle International are associated (or correlated) with Stockland. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stockland has no effect on the direction of Crown Castle i.e., Crown Castle and Stockland go up and down completely randomly.

Pair Corralation between Crown Castle and Stockland

Assuming the 90 days horizon Crown Castle International is expected to generate 0.93 times more return on investment than Stockland. However, Crown Castle International is 1.07 times less risky than Stockland. It trades about -0.34 of its potential returns per unit of risk. Stockland is currently generating about -0.36 per unit of risk. If you would invest  9,827  in Crown Castle International on September 23, 2024 and sell it today you would lose (890.00) from holding Crown Castle International or give up 9.06% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Crown Castle International  vs.  Stockland

Crown Castle Interna

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crown Castle International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Stockland

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stockland has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Crown Castle and Stockland

The main advantage of trading using opposite Crown Castle and Stockland positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crown Castle position performs unexpectedly, Stockland 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 Stockland will offset losses from the drop in Stockland's long position.

The idea behind Crown Castle International and Stockland pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.