Correlation Between Crown Castle and Iron Mountain

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

By analyzing existing cross correlation between Crown Castle and Iron Mountain Incorporated, you can compare the effects of market volatilities on Crown Castle and Iron Mountain 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 Iron Mountain. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crown Castle and Iron Mountain.

Diversification Opportunities for Crown Castle and Iron Mountain

-0.18

Correlation Coefficient

Crown Castle  Iron Mountain

Good diversification

The 3 months correlation between Crown and Iron is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Crown Castle and Iron Mountain Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iron Mountain 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 are associated (or correlated) with Iron Mountain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iron Mountain has no effect on the direction of Crown Castle i.e., Crown Castle and Iron Mountain go up and down completely randomly.

Pair Corralation between Crown Castle and Iron Mountain

Considering the 90-day investment horizon Crown Castle is expected to under-perform the Iron Mountain. But the stock apears to be less risky and, when comparing its historical volatility, Crown Castle is 1.33 times less risky than Iron Mountain. The stock trades about -0.05 of its potential returns per unit of risk. The Iron Mountain Incorporated is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  11,214  in Iron Mountain Incorporated on September 2, 2024 and sell it today you would earn a total of  1,153  from holding Iron Mountain Incorporated or generate 10.28% return on investment over 90 days.

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

Crown Castle  vs.  Iron Mountain Incorporated

Crown Castle

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crown Castle has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, Crown Castle is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Iron Mountain

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Iron Mountain Incorporated are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Iron Mountain may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Crown Castle and Iron Mountain

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

The idea behind Crown Castle and Iron Mountain Incorporated 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.