Correlation Between Crown Castle and Outfront Media

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

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

Diversification Opportunities for Crown Castle and Outfront Media

-0.72

Correlation Coefficient

Crown Castle  Outfront Media

Pay attention - limited upside

The 3 months correlation between Crown and Outfront is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Crown Castle and Outfront Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Outfront Media and Crown Castle 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 Crown Castle are associated (or correlated) with Outfront Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Outfront Media has no effect on the direction of Crown Castle i.e., Crown Castle and Outfront Media go up and down completely randomly.

Pair Corralation between Crown Castle and Outfront Media

Considering the 90-day investment horizon Crown Castle is expected to generate 1.04 times more return on investment than Outfront Media. However, Crown Castle is 1.04 times more volatile than Outfront Media. It trades about 0.13 of its potential returns per unit of risk. Outfront Media is currently generating about -0.05 per unit of risk. If you would invest  8,830  in Crown Castle on December 29, 2024 and sell it today you would earn a total of  1,429  from holding Crown Castle or generate 16.18% return on investment over 90 days.

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

Crown Castle  vs.  Outfront Media

Crown Castle

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Crown Castle are ranked lower than 9 (%) 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.

Outfront Media

Risk-Adjusted Performance

Very Weak

Over the last 90 days Outfront Media has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Crown Castle and Outfront Media

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

The idea behind Crown Castle and Outfront Media 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.