Correlation Between American Assets and American Tower

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

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

Diversification Opportunities for American Assets and American Tower

-0.55

Correlation Coefficient

American Assets  American Tower

Excellent diversification

The 3 months correlation between American and American is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding American Assets Trust 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 American Assets 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 Assets Trust 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 American Assets i.e., American Assets and American Tower go up and down completely randomly.

Pair Corralation between American Assets and American Tower

Considering the 90-day investment horizon American Assets Trust is expected to generate 0.77 times more return on investment than American Tower. However, American Assets Trust is 1.31 times less risky than American Tower. It trades about 0.08 of its potential returns per unit of risk. American Tower Corp is currently generating about -0.05 per unit of risk. If you would invest  2,691  in American Assets Trust on August 30, 2024 and sell it today you would earn a total of  170.00  from holding American Assets Trust or generate 6.32% return on investment over 90 days.

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

American Assets Trust  vs.  American Tower Corp

American Assets Trust

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in American Assets Trust are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, American Assets may actually be approaching a critical reversion point that can send shares even higher in December 2024.

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. In spite of comparatively stable primary indicators, American Tower is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with American Assets and American Tower

The main advantage of trading using opposite American Assets and American Tower positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Assets 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 American Assets Trust 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.

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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.