Correlation Between Aptiv PLC and CROWN

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

By analyzing existing cross correlation between Aptiv PLC and CROWN CASTLE INTERNATIONAL, you can compare the effects of market volatilities on Aptiv PLC and CROWN 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 Aptiv PLC with a short position of CROWN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aptiv PLC and CROWN.

Diversification Opportunities for Aptiv PLC and CROWN

0.63

Correlation Coefficient

Aptiv PLC  CROWN

Poor diversification

The 3 months correlation between Aptiv and CROWN is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Aptiv PLC 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 Aptiv PLC 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 Aptiv PLC are associated (or correlated) with CROWN. 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 Aptiv PLC i.e., Aptiv PLC and CROWN go up and down completely randomly.

Pair Corralation between Aptiv PLC and CROWN

Given the investment horizon of 90 days Aptiv PLC is expected to generate 1.19 times less return on investment than CROWN. But when comparing it to its historical volatility, Aptiv PLC is 2.87 times less risky than CROWN. It trades about 0.26 of its potential returns per unit of risk. CROWN CASTLE INTERNATIONAL is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  6,947  in CROWN CASTLE INTERNATIONAL on October 8, 2024 and sell it today you would earn a total of  316.00  from holding CROWN CASTLE INTERNATIONAL or generate 4.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	78.95%
Values	Daily Returns

Aptiv PLC  vs.  CROWN CASTLE INTERNATIONAL

Aptiv PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aptiv PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

CROWN CASTLE INTERNA

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CROWN CASTLE INTERNATIONAL are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, CROWN is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Aptiv PLC and CROWN

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

The idea behind Aptiv PLC 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.