Correlation Between PotlatchDeltic and American Tower

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

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

Diversification Opportunities for PotlatchDeltic and American Tower

0.64

Correlation Coefficient

PotlatchDeltic  American Tower

Poor diversification

The 3 months correlation between PotlatchDeltic and American is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding PotlatchDeltic 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 PotlatchDeltic 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 PotlatchDeltic 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 PotlatchDeltic i.e., PotlatchDeltic and American Tower go up and down completely randomly.

Pair Corralation between PotlatchDeltic and American Tower

Assuming the 90 days horizon PotlatchDeltic is expected to generate 1.05 times less return on investment than American Tower. In addition to that, PotlatchDeltic is 1.05 times more volatile than American Tower Corp. It trades about 0.11 of its total potential returns per unit of risk. American Tower Corp is currently generating about 0.12 per unit of volatility. If you would invest  17,482  in American Tower Corp on December 26, 2024 and sell it today you would earn a total of  2,024  from holding American Tower Corp or generate 11.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

PotlatchDeltic  vs.  American Tower Corp

PotlatchDeltic

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PotlatchDeltic are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, PotlatchDeltic may actually be approaching a critical reversion point that can send shares even higher in April 2025.

American Tower Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in American Tower Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, American Tower may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with PotlatchDeltic and American Tower

The main advantage of trading using opposite PotlatchDeltic and American Tower positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PotlatchDeltic 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 PotlatchDeltic 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.