Correlation Between Iron Mountain and Crown Castle

Can any of the company-specific risk be diversified away by investing in both Iron Mountain and Crown Castle 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 Crown Castle 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 Crown Castle, you can compare the effects of market volatilities on Iron Mountain and Crown Castle 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 Crown Castle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iron Mountain and Crown Castle.

Diversification Opportunities for Iron Mountain and Crown Castle

0.79

Correlation Coefficient

Iron Mountain  Crown Castle

Poor diversification

The 3 months correlation between Iron and Crown is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Iron Mountain Incorporated and Crown Castle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crown Castle 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 Crown Castle. 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 has no effect on the direction of Iron Mountain i.e., Iron Mountain and Crown Castle go up and down completely randomly.

Pair Corralation between Iron Mountain and Crown Castle

Considering the 90-day investment horizon Iron Mountain Incorporated is expected to generate 1.04 times more return on investment than Crown Castle. However, Iron Mountain is 1.04 times more volatile than Crown Castle. It trades about 0.09 of its potential returns per unit of risk. Crown Castle is currently generating about -0.02 per unit of risk. If you would invest  4,734  in Iron Mountain Incorporated on November 29, 2024 and sell it today you would earn a total of  4,506  from holding Iron Mountain Incorporated or generate 95.18% return on investment over 90 days.

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

Iron Mountain Incorporated  vs.  Crown Castle

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. 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.

Crown Castle

Risk-Adjusted Performance

Very Weak

Over the last 90 days Crown Castle has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Iron Mountain and Crown Castle

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

The idea behind Iron Mountain Incorporated and Crown Castle 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 CEOs Directory module to screen CEOs from public companies around the world.