Correlation Between Crown Castle and Newlake Capital

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

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

Diversification Opportunities for Crown Castle and Newlake Capital

0.81

Correlation Coefficient

Crown Castle  Newlake Capital

Very poor diversification

The 3 months correlation between Crown and Newlake is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Crown Castle and Newlake Capital Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newlake Capital Partners 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 Newlake Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newlake Capital Partners has no effect on the direction of Crown Castle i.e., Crown Castle and Newlake Capital go up and down completely randomly.

Pair Corralation between Crown Castle and Newlake Capital

Considering the 90-day investment horizon Crown Castle is expected to under-perform the Newlake Capital. In addition to that, Crown Castle is 1.03 times more volatile than Newlake Capital Partners. It trades about -0.05 of its total potential returns per unit of risk. Newlake Capital Partners is currently generating about -0.04 per unit of volatility. If you would invest  1,967  in Newlake Capital Partners on September 3, 2024 and sell it today you would lose (73.00) from holding Newlake Capital Partners or give up 3.71% of portfolio value over 90 days.

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

Crown Castle  vs.  Newlake Capital Partners

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 current stock price confusion, may contribute to short-horizon losses for the traders.

Newlake Capital Partners

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Newlake Capital Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, Newlake Capital is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Crown Castle and Newlake Capital

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

The idea behind Crown Castle and Newlake Capital Partners 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.