Correlation Between Charter Communications and Iron Mountain

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

By analyzing existing cross correlation between Charter Communications and Iron Mountain Incorporated, you can compare the effects of market volatilities on Charter Communications and Iron Mountain 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 Charter Communications with a short position of Iron Mountain. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charter Communications and Iron Mountain.

Diversification Opportunities for Charter Communications and Iron Mountain

0.11

Correlation Coefficient

Charter Communications  Iron Mountain

Average diversification

The 3 months correlation between Charter and Iron is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Charter Communications and Iron Mountain Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iron Mountain and Charter Communications 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 Charter Communications are associated (or correlated) with Iron Mountain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iron Mountain has no effect on the direction of Charter Communications i.e., Charter Communications and Iron Mountain go up and down completely randomly.

Pair Corralation between Charter Communications and Iron Mountain

Assuming the 90 days trading horizon Charter Communications is expected to generate 1.37 times more return on investment than Iron Mountain. However, Charter Communications is 1.37 times more volatile than Iron Mountain Incorporated. It trades about 0.02 of its potential returns per unit of risk. Iron Mountain Incorporated is currently generating about -0.25 per unit of risk. If you would invest  3,540  in Charter Communications on December 29, 2024 and sell it today you would earn a total of  38.00  from holding Charter Communications or generate 1.07% return on investment over 90 days.

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

Charter Communications  vs.  Iron Mountain Incorporated

Charter Communications

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Charter Communications are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, Charter Communications is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Iron Mountain

Risk-Adjusted Performance

Very Weak

Over the last 90 days Iron Mountain Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Charter Communications and Iron Mountain

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

The idea behind Charter Communications and Iron Mountain Incorporated 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.