Correlation Between Shenandoah Telecommunicatio and Continental

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

By analyzing existing cross correlation between Shenandoah Telecommunications and Camden Property Trust, you can compare the effects of market volatilities on Shenandoah Telecommunicatio and Continental 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 Shenandoah Telecommunicatio with a short position of Continental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenandoah Telecommunicatio and Continental.

Diversification Opportunities for Shenandoah Telecommunicatio and Continental

-0.26

Correlation Coefficient

Shenandoah Telecommunicatio  Continental

Very good diversification

The 3 months correlation between Shenandoah and Continental is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Shenandoah Telecommunications and Camden Property Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Camden Property Trust and Shenandoah Telecommunicatio 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 Shenandoah Telecommunications are associated (or correlated) with Continental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Camden Property Trust has no effect on the direction of Shenandoah Telecommunicatio i.e., Shenandoah Telecommunicatio and Continental go up and down completely randomly.

Pair Corralation between Shenandoah Telecommunicatio and Continental

Assuming the 90 days horizon Shenandoah Telecommunications is expected to under-perform the Continental. In addition to that, Shenandoah Telecommunicatio is 3.2 times more volatile than Camden Property Trust. It trades about -0.1 of its total potential returns per unit of risk. Camden Property Trust is currently generating about 0.1 per unit of volatility. If you would invest  10,801  in Camden Property Trust on October 8, 2024 and sell it today you would earn a total of  499.00  from holding Camden Property Trust or generate 4.62% return on investment over 90 days.

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

Shenandoah Telecommunications  vs.  Camden Property Trust

Shenandoah Telecommunicatio

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Shenandoah Telecommunications are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Shenandoah Telecommunicatio is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Camden Property Trust

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Camden Property Trust are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Continental is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Shenandoah Telecommunicatio and Continental

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

The idea behind Shenandoah Telecommunications and Camden Property Trust 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.

Check out your portfolio center.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.