Correlation Between Iron Mountain and Gaming Leisure

Can any of the company-specific risk be diversified away by investing in both Iron Mountain and Gaming Leisure 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 Gaming Leisure 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 Gaming Leisure Properties, you can compare the effects of market volatilities on Iron Mountain and Gaming Leisure 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 Gaming Leisure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iron Mountain and Gaming Leisure.

Diversification Opportunities for Iron Mountain and Gaming Leisure

0.13

Correlation Coefficient

Iron Mountain  Gaming Leisure

Average diversification

The 3 months correlation between Iron and Gaming is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Iron Mountain Incorporated and Gaming Leisure Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaming Leisure Properties 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 Gaming Leisure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gaming Leisure Properties has no effect on the direction of Iron Mountain i.e., Iron Mountain and Gaming Leisure go up and down completely randomly.

Pair Corralation between Iron Mountain and Gaming Leisure

Considering the 90-day investment horizon Iron Mountain Incorporated is expected to generate 2.2 times more return on investment than Gaming Leisure. However, Iron Mountain is 2.2 times more volatile than Gaming Leisure Properties. It trades about 0.08 of its potential returns per unit of risk. Gaming Leisure Properties is currently generating about 0.01 per unit of risk. 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

Iron Mountain Incorporated  vs.  Gaming Leisure Properties

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.

Gaming Leisure Properties

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Iron Mountain and Gaming Leisure

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

The idea behind Iron Mountain Incorporated and Gaming Leisure Properties 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.