Correlation Between Alexandria Real and Crestwood Equity

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

By analyzing existing cross correlation between Alexandria Real Estate and Crestwood Equity Partners, you can compare the effects of market volatilities on Alexandria Real and Crestwood Equity 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 Alexandria Real with a short position of Crestwood Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alexandria Real and Crestwood Equity.

Diversification Opportunities for Alexandria Real and Crestwood Equity

-0.76

Correlation Coefficient

Alexandria Real  Crestwood Equity

Pay attention - limited upside

The 3 months correlation between Alexandria and Crestwood is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Alexandria Real Estate and Crestwood Equity Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crestwood Equity Partners and Alexandria Real 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 Alexandria Real Estate are associated (or correlated) with Crestwood Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crestwood Equity Partners has no effect on the direction of Alexandria Real i.e., Alexandria Real and Crestwood Equity go up and down completely randomly.

Pair Corralation between Alexandria Real and Crestwood Equity

If you would invest  2,942  in Crestwood Equity Partners on September 14, 2024 and sell it today you would earn a total of  0.00  from holding Crestwood Equity Partners or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	1.59%
Values	Daily Returns

Alexandria Real Estate  vs.  Crestwood Equity Partners

Alexandria Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alexandria Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Crestwood Equity Partners

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crestwood Equity Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Crestwood Equity is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Alexandria Real and Crestwood Equity

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

The idea behind Alexandria Real Estate and Crestwood Equity Partners 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.