Correlation Between Crown Castle and FORWARD AIR

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

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

Diversification Opportunities for Crown Castle and FORWARD AIR

-0.4

Correlation Coefficient

Crown Castle  FORWARD AIR

Very good diversification

The 3 months correlation between Crown and FORWARD is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Crown Castle International and FORWARD AIR P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FORWARD AIR P and Crown Castle 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 Crown Castle International are associated (or correlated) with FORWARD AIR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FORWARD AIR P has no effect on the direction of Crown Castle i.e., Crown Castle and FORWARD AIR go up and down completely randomly.

Pair Corralation between Crown Castle and FORWARD AIR

Assuming the 90 days horizon Crown Castle International is expected to generate 0.57 times more return on investment than FORWARD AIR. However, Crown Castle International is 1.75 times less risky than FORWARD AIR. It trades about 0.07 of its potential returns per unit of risk. FORWARD AIR P is currently generating about -0.18 per unit of risk. If you would invest  8,583  in Crown Castle International on December 20, 2024 and sell it today you would earn a total of  754.00  from holding Crown Castle International or generate 8.78% return on investment over 90 days.

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

Crown Castle International  vs.  FORWARD AIR P

Crown Castle Interna

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Crown Castle International are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Crown Castle may actually be approaching a critical reversion point that can send shares even higher in April 2025.

FORWARD AIR P

Risk-Adjusted Performance

Very Weak

Over the last 90 days FORWARD AIR P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Crown Castle and FORWARD AIR

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

The idea behind Crown Castle International and FORWARD AIR P 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.