Correlation Between American Tower and Information Services

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

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

Diversification Opportunities for American Tower and Information Services

-0.34

Correlation Coefficient

American Tower  Information Services

Very good diversification

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

Pair Corralation between American Tower and Information Services

Assuming the 90 days horizon American Tower Corp is expected to generate 0.79 times more return on investment than Information Services. However, American Tower Corp is 1.26 times less risky than Information Services. It trades about 0.02 of its potential returns per unit of risk. Information Services International Dentsu is currently generating about 0.01 per unit of risk. If you would invest  17,515  in American Tower Corp on October 24, 2024 and sell it today you would earn a total of  693.00  from holding American Tower Corp or generate 3.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

American Tower Corp  vs.  Information Services Internati

American Tower Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days American Tower Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain 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.

Information Services

Risk-Adjusted Performance

5 of 100

Modest

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

Pair Trading with American Tower and Information Services

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

The idea behind American Tower Corp and Information Services International Dentsu 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.