Correlation Between Global Net and CROWN

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

By analyzing existing cross correlation between Global Net Lease and CROWN CASTLE INTL, you can compare the effects of market volatilities on Global Net and CROWN 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 Global Net with a short position of CROWN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Net and CROWN.

Diversification Opportunities for Global Net and CROWN

0.32

Correlation Coefficient

Global Net  CROWN

Weak diversification

The 3 months correlation between Global and CROWN is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Global Net Lease and CROWN CASTLE INTL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CROWN CASTLE INTL and Global Net 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 Global Net Lease are associated (or correlated) with CROWN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CROWN CASTLE INTL has no effect on the direction of Global Net i.e., Global Net and CROWN go up and down completely randomly.

Pair Corralation between Global Net and CROWN

Assuming the 90 days trading horizon Global Net Lease is expected to generate 2.08 times more return on investment than CROWN. However, Global Net is 2.08 times more volatile than CROWN CASTLE INTL. It trades about -0.04 of its potential returns per unit of risk. CROWN CASTLE INTL is currently generating about -0.19 per unit of risk. If you would invest  2,254  in Global Net Lease on October 22, 2024 and sell it today you would lose (26.00) from holding Global Net Lease or give up 1.15% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	94.74%
Values	Daily Returns

Global Net Lease  vs.  CROWN CASTLE INTL

Global Net Lease

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Net Lease has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, Global Net is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

CROWN CASTLE INTL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CROWN CASTLE INTL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CROWN is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Global Net and CROWN

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

The idea behind Global Net Lease and CROWN CASTLE INTL 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.