Correlation Between Crown Castle and Outfront Media

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

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

Diversification Opportunities for Crown Castle and Outfront Media

-0.45

Correlation Coefficient

Crown Castle  Outfront Media

Very good diversification

The 3 months correlation between Crown and Outfront is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Crown Castle and Outfront Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Outfront Media 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 Outfront Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Outfront Media has no effect on the direction of Crown Castle i.e., Crown Castle and Outfront Media go up and down completely randomly.

Pair Corralation between Crown Castle and Outfront Media

Considering the 90-day investment horizon Crown Castle is expected to under-perform the Outfront Media. In addition to that, Crown Castle is 1.27 times more volatile than Outfront Media. It trades about -0.03 of its total potential returns per unit of risk. Outfront Media is currently generating about 0.52 per unit of volatility. If you would invest  1,705  in Outfront Media on September 1, 2024 and sell it today you would earn a total of  216.00  from holding Outfront Media or generate 12.67% return on investment over 90 days.

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

Crown Castle  vs.  Outfront Media

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.

Outfront Media

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Outfront Media are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Outfront Media unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Crown Castle and Outfront Media

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

The idea behind Crown Castle and Outfront Media 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.