Correlation Between Beowulf Mining and American Tower

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

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

Diversification Opportunities for Beowulf Mining and American Tower

0.89

Correlation Coefficient

Beowulf Mining  American Tower

Very poor diversification

The 3 months correlation between Beowulf and American is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Beowulf Mining and American Tower REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Tower REIT and Beowulf Mining 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 Beowulf Mining 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 REIT has no effect on the direction of Beowulf Mining i.e., Beowulf Mining and American Tower go up and down completely randomly.

Pair Corralation between Beowulf Mining and American Tower

Assuming the 90 days trading horizon Beowulf Mining is expected to generate 2.7 times more return on investment than American Tower. However, Beowulf Mining is 2.7 times more volatile than American Tower REIT. It trades about 0.12 of its potential returns per unit of risk. American Tower REIT is currently generating about 0.18 per unit of risk. If you would invest  1,450  in Beowulf Mining on December 25, 2024 and sell it today you would earn a total of  400.00  from holding Beowulf Mining or generate 27.59% return on investment over 90 days.

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

Beowulf Mining  vs.  American Tower REIT

Beowulf Mining

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Beowulf Mining are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Beowulf Mining exhibited solid returns over the last few months and may actually be approaching a breakup point.

American Tower REIT

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in American Tower REIT are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, American Tower unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Beowulf Mining and American Tower

The main advantage of trading using opposite Beowulf Mining and American Tower positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beowulf Mining 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 Beowulf Mining and American Tower REIT 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.