Correlation Between PLAYMATES TOYS and American Tower

Can any of the company-specific risk be diversified away by investing in both PLAYMATES TOYS and American Tower 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 PLAYMATES TOYS and American Tower into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PLAYMATES TOYS and American Tower Corp, you can compare the effects of market volatilities on PLAYMATES TOYS and American Tower 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 PLAYMATES TOYS with a short position of American Tower. Check out your portfolio center. Please also check ongoing floating volatility patterns of PLAYMATES TOYS and American Tower.

Diversification Opportunities for PLAYMATES TOYS and American Tower

-0.34

Correlation Coefficient

PLAYMATES TOYS  American Tower

Very good diversification

The 3 months correlation between PLAYMATES and American is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding PLAYMATES TOYS and American Tower Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Tower Corp and PLAYMATES TOYS 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 PLAYMATES TOYS are associated (or correlated) with American Tower. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Tower Corp has no effect on the direction of PLAYMATES TOYS i.e., PLAYMATES TOYS and American Tower go up and down completely randomly.

Pair Corralation between PLAYMATES TOYS and American Tower

Assuming the 90 days trading horizon PLAYMATES TOYS is expected to generate 17.97 times less return on investment than American Tower. In addition to that, PLAYMATES TOYS is 2.84 times more volatile than American Tower Corp. It trades about 0.0 of its total potential returns per unit of risk. American Tower Corp is currently generating about 0.14 per unit of volatility. If you would invest  17,482  in American Tower Corp on December 24, 2024 and sell it today you would earn a total of  2,208  from holding American Tower Corp or generate 12.63% return on investment over 90 days.

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

PLAYMATES TOYS  vs.  American Tower Corp

PLAYMATES TOYS

Risk-Adjusted Performance

Weak

Over the last 90 days PLAYMATES TOYS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, PLAYMATES TOYS is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

American Tower Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in American Tower Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, American Tower reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PLAYMATES TOYS and American Tower

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

The idea behind PLAYMATES TOYS and American Tower Corp 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.