Correlation Between Iron Mountain and American Tower

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Can any of the company-specific risk be diversified away by investing in both Iron Mountain 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 Iron Mountain and American Tower into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iron Mountain Incorporated and American Tower Corp, you can compare the effects of market volatilities on Iron Mountain 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 Iron Mountain with a short position of American Tower. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iron Mountain and American Tower.

Diversification Opportunities for Iron Mountain and American Tower

0.84
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Iron and American is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Iron Mountain Incorporated 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 Iron Mountain 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 Iron Mountain Incorporated 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 Iron Mountain i.e., Iron Mountain and American Tower go up and down completely randomly.

Pair Corralation between Iron Mountain and American Tower

Considering the 90-day investment horizon Iron Mountain Incorporated is expected to under-perform the American Tower. In addition to that, Iron Mountain is 1.34 times more volatile than American Tower Corp. It trades about -0.13 of its total potential returns per unit of risk. American Tower Corp is currently generating about -0.04 per unit of volatility. If you would invest  19,938  in American Tower Corp on November 19, 2024 and sell it today you would lose (1,000.00) from holding American Tower Corp or give up 5.02% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Iron Mountain Incorporated  vs.  American Tower Corp

 Performance 
       Timeline  
Iron Mountain 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Iron Mountain Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in March 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.
American Tower Corp 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
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.

Iron Mountain and American Tower Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Iron Mountain and American Tower

The main advantage of trading using opposite Iron Mountain and American Tower positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iron Mountain 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 Iron Mountain Incorporated 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.

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