Correlation Between Charter Communications and Crown Holdings

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

By analyzing existing cross correlation between Charter Communications and Crown Holdings, you can compare the effects of market volatilities on Charter Communications and Crown Holdings 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 Crown Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charter Communications and Crown Holdings.

Diversification Opportunities for Charter Communications and Crown Holdings

0.13

Correlation Coefficient

Charter Communications  Crown Holdings

Average diversification

The 3 months correlation between Charter and Crown is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Charter Communications and Crown Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crown Holdings 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 Crown Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crown Holdings has no effect on the direction of Charter Communications i.e., Charter Communications and Crown Holdings go up and down completely randomly.

Pair Corralation between Charter Communications and Crown Holdings

Assuming the 90 days trading horizon Charter Communications is expected to under-perform the Crown Holdings. In addition to that, Charter Communications is 2.39 times more volatile than Crown Holdings. It trades about -0.17 of its total potential returns per unit of risk. Crown Holdings is currently generating about -0.38 per unit of volatility. If you would invest  8,664  in Crown Holdings on September 23, 2024 and sell it today you would lose (734.00) from holding Crown Holdings or give up 8.47% of portfolio value over 90 days.

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

Charter Communications  vs.  Crown Holdings

Charter Communications

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Charter Communications are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Charter Communications unveiled solid returns over the last few months and may actually be approaching a breakup point.

Crown Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crown Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Crown Holdings is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Charter Communications and Crown Holdings

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

The idea behind Charter Communications and Crown Holdings 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.