Correlation Between EPR Properties and Iron Mountain

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

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

Diversification Opportunities for EPR Properties and Iron Mountain

0.07

Correlation Coefficient

EPR Properties  Iron Mountain

Significant diversification

The 3 months correlation between EPR and Iron is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding EPR Properties and Iron Mountain Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iron Mountain and EPR Properties 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 EPR Properties 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 EPR Properties i.e., EPR Properties and Iron Mountain go up and down completely randomly.

Pair Corralation between EPR Properties and Iron Mountain

Considering the 90-day investment horizon EPR Properties is expected to under-perform the Iron Mountain. But the stock apears to be less risky and, when comparing its historical volatility, EPR Properties is 1.77 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 0.08 of returns per unit of risk over similar time horizon. If you would invest  11,218  in Iron Mountain Incorporated on September 4, 2024 and sell it today you would earn a total of  941.00  from holding Iron Mountain Incorporated or generate 8.39% return on investment over 90 days.

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

EPR Properties  vs.  Iron Mountain Incorporated

EPR Properties

Risk-Adjusted Performance

0 of 100

Very Weak

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

Iron Mountain

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Iron Mountain Incorporated are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Iron Mountain may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with EPR Properties and Iron Mountain

The main advantage of trading using opposite EPR Properties and Iron Mountain positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EPR Properties 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 EPR Properties 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.

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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.