Correlation Between Crown Castle and VICI Properties

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Can any of the company-specific risk be diversified away by investing in both Crown Castle and VICI Properties 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 VICI Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Crown Castle and VICI Properties, you can compare the effects of market volatilities on Crown Castle and VICI Properties 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 VICI Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crown Castle and VICI Properties.

Diversification Opportunities for Crown Castle and VICI Properties

0.89
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Crown and VICI is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Crown Castle and VICI Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VICI Properties 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 VICI Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VICI Properties has no effect on the direction of Crown Castle i.e., Crown Castle and VICI Properties go up and down completely randomly.

Pair Corralation between Crown Castle and VICI Properties

Considering the 90-day investment horizon Crown Castle is expected to under-perform the VICI Properties. But the stock apears to be less risky and, when comparing its historical volatility, Crown Castle is 1.32 times less risky than VICI Properties. The stock trades about -0.6 of its potential returns per unit of risk. The VICI Properties is currently generating about -0.42 of returns per unit of risk over similar time horizon. If you would invest  3,177  in VICI Properties on September 20, 2024 and sell it today you would lose (286.00) from holding VICI Properties or give up 9.0% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Crown Castle  vs.  VICI Properties

 Performance 
       Timeline  
Crown Castle 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Crown Castle 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 fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.
VICI Properties 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days VICI Properties has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Crown Castle and VICI Properties Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Crown Castle and VICI Properties

The main advantage of trading using opposite Crown Castle and VICI Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crown Castle position performs unexpectedly, VICI Properties 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 VICI Properties will offset losses from the drop in VICI Properties' long position.
The idea behind Crown Castle and VICI Properties 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..

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