Correlation Between GPT and Crown Castle

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

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

Diversification Opportunities for GPT and Crown Castle

0.83

Correlation Coefficient

GPT  Crown Castle

Very poor diversification

The 3 months correlation between GPT and Crown is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding GPT Group 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 GPT 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 GPT Group 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 GPT i.e., GPT and Crown Castle go up and down completely randomly.

Pair Corralation between GPT and Crown Castle

Assuming the 90 days horizon GPT Group is expected to generate 1.04 times more return on investment than Crown Castle. However, GPT is 1.04 times more volatile than Crown Castle International. It trades about -0.11 of its potential returns per unit of risk. Crown Castle International is currently generating about -0.29 per unit of risk. If you would invest  274.00  in GPT Group on September 22, 2024 and sell it today you would lose (9.00) from holding GPT Group or give up 3.28% of portfolio value over 90 days.

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

GPT Group  vs.  Crown Castle International

GPT Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GPT Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

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 fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with GPT and Crown Castle

The main advantage of trading using opposite GPT and Crown Castle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GPT 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 GPT Group 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.