Correlation Between Prologis and American Tower
Can any of the company-specific risk be diversified away by investing in both Prologis 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 Prologis and American Tower into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prologis and American Tower Corp, you can compare the effects of market volatilities on Prologis 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 Prologis with a short position of American Tower. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prologis and American Tower.
Diversification Opportunities for Prologis and American Tower
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Prologis and American is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Prologis 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 Prologis 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 Prologis 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 Prologis i.e., Prologis and American Tower go up and down completely randomly.
Pair Corralation between Prologis and American Tower
Considering the 90-day investment horizon Prologis is expected to under-perform the American Tower. In addition to that, Prologis is 1.25 times more volatile than American Tower Corp. It trades about -0.44 of its total potential returns per unit of risk. American Tower Corp is currently generating about -0.32 per unit of volatility. If you would invest 19,290 in American Tower Corp on January 20, 2024 and sell it today you would lose (2,190) from holding American Tower Corp or give up 11.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prologis vs. American Tower Corp
Performance |
| Timeline |
| Prologis |
| American Tower Corp |
Prologis and American Tower Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prologis and American Tower
The main advantage of trading using opposite Prologis and American Tower positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prologis 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.| Prologis vs. Extra Space Storage | Prologis vs. CubeSmart | Prologis vs. STAG Industrial | Prologis vs. Innovative Industrial Properties |
| American Tower vs. Digital Realty Trust | American Tower vs. Equinix | American Tower vs. SBA Communications Corp | American Tower vs. Iron Mountain Incorporated |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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