Correlation Between EPR Properties and American Tower

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

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

Diversification Opportunities for EPR Properties and American Tower

0.21

Correlation Coefficient

EPR Properties  American Tower

Modest diversification

The 3 months correlation between EPR and American is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding EPR Properties and American Tower Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Tower Corp and EPR Properties 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 EPR Properties 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 Corp has no effect on the direction of EPR Properties i.e., EPR Properties and American Tower go up and down completely randomly.

Pair Corralation between EPR Properties and American Tower

Considering the 90-day investment horizon EPR Properties is expected to generate 0.63 times more return on investment than American Tower. However, EPR Properties is 1.59 times less risky than American Tower. It trades about 0.22 of its potential returns per unit of risk. American Tower Corp is currently generating about 0.01 per unit of risk. If you would invest  4,446  in EPR Properties on December 1, 2024 and sell it today you would earn a total of  738.00  from holding EPR Properties or generate 16.6% return on investment over 90 days.

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

EPR Properties  vs.  American Tower Corp

EPR Properties

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in EPR Properties are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, EPR Properties reported solid returns over the last few months and may actually be approaching a breakup point.

American Tower Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days American Tower Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, American Tower is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with EPR Properties and American Tower

The main advantage of trading using opposite EPR Properties and American Tower positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EPR Properties 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 EPR Properties and American Tower Corp 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.