Correlation Between CROWN and Eastern

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

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

Diversification Opportunities for CROWN and Eastern

-0.04

Correlation Coefficient

CROWN  Eastern

Good diversification

The 3 months correlation between CROWN and Eastern is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding CROWN CASTLE INTL and Eastern Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern and CROWN 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 CROWN CASTLE INTL are associated (or correlated) with Eastern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastern has no effect on the direction of CROWN i.e., CROWN and Eastern go up and down completely randomly.

Pair Corralation between CROWN and Eastern

Assuming the 90 days trading horizon CROWN CASTLE INTL is expected to under-perform the Eastern. But the bond apears to be less risky and, when comparing its historical volatility, CROWN CASTLE INTL is 2.3 times less risky than Eastern. The bond trades about -0.01 of its potential returns per unit of risk. The Eastern Co is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  2,704  in Eastern Co on October 22, 2024 and sell it today you would earn a total of  66.00  from holding Eastern Co or generate 2.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

CROWN CASTLE INTL  vs.  Eastern Co

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.

Eastern

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eastern Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's primary indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with CROWN and Eastern

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

The idea behind CROWN CASTLE INTL and Eastern Co 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.