Correlation Between AFC Gamma and Crown Castle

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

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

Diversification Opportunities for AFC Gamma and Crown Castle

-0.83

Correlation Coefficient

AFC Gamma  Crown Castle

Pay attention - limited upside

The 3 months correlation between AFC and Crown is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding AFC Gamma and Crown Castle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crown Castle and AFC Gamma 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 AFC Gamma 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 has no effect on the direction of AFC Gamma i.e., AFC Gamma and Crown Castle go up and down completely randomly.

Pair Corralation between AFC Gamma and Crown Castle

Given the investment horizon of 90 days AFC Gamma is expected to under-perform the Crown Castle. In addition to that, AFC Gamma is 1.52 times more volatile than Crown Castle. It trades about -0.13 of its total potential returns per unit of risk. Crown Castle is currently generating about 0.11 per unit of volatility. If you would invest  8,907  in Crown Castle on December 27, 2024 and sell it today you would earn a total of  1,202  from holding Crown Castle or generate 13.5% return on investment over 90 days.

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

AFC Gamma  vs.  Crown Castle

AFC Gamma

Risk-Adjusted Performance

Very Weak

Over the last 90 days AFC Gamma has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental 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.

Crown Castle

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Crown Castle are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak fundamental indicators, Crown Castle demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AFC Gamma and Crown Castle

The main advantage of trading using opposite AFC Gamma and Crown Castle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AFC Gamma 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 AFC Gamma and Crown Castle 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.