Correlation Between Iron Mountain and Crown Castle

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

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

Diversification Opportunities for Iron Mountain and Crown Castle

0.16

Correlation Coefficient

Iron Mountain  Crown Castle

Average diversification

The 3 months correlation between Iron and Crown is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Iron Mountain Incorporated and Crown Castle International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crown Castle Interna and Iron Mountain 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 Iron Mountain Incorporated are associated (or correlated) with Crown Castle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crown Castle Interna has no effect on the direction of Iron Mountain i.e., Iron Mountain and Crown Castle go up and down completely randomly.

Pair Corralation between Iron Mountain and Crown Castle

Assuming the 90 days trading horizon Iron Mountain Incorporated is expected to under-perform the Crown Castle. But the stock apears to be less risky and, when comparing its historical volatility, Iron Mountain Incorporated is 2.45 times less risky than Crown Castle. The stock trades about -0.16 of its potential returns per unit of risk. The Crown Castle International is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  15,105  in Crown Castle International on September 25, 2024 and sell it today you would lose (1,161) from holding Crown Castle International or give up 7.69% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Iron Mountain Incorporated  vs.  Crown Castle International

Iron Mountain

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Iron Mountain Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Iron Mountain is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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 weak performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Iron Mountain and Crown Castle

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

The idea behind Iron Mountain Incorporated and Crown Castle International 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.