Correlation Between 8x8 Common and American Tower
Can any of the company-specific risk be diversified away by investing in both 8x8 Common 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 8x8 Common and American Tower into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 8x8 Common Stock and American Tower Corp, you can compare the effects of market volatilities on 8x8 Common 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 8x8 Common with a short position of American Tower. Check out your portfolio center. Please also check ongoing floating volatility patterns of 8x8 Common and American Tower.
Diversification Opportunities for 8x8 Common and American Tower
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 8x8 and American is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding 8x8 Common Stock 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 8x8 Common 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 8x8 Common Stock 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 8x8 Common i.e., 8x8 Common and American Tower go up and down completely randomly.
Pair Corralation between 8x8 Common and American Tower
Given the investment horizon of 90 days 8x8 Common Stock is expected to under-perform the American Tower. In addition to that, 8x8 Common is 2.95 times more volatile than American Tower Corp. It trades about -0.01 of its total potential returns per unit of risk. American Tower Corp is currently generating about -0.03 per unit of volatility. If you would invest 23,886 in American Tower Corp on January 19, 2024 and sell it today you would lose (6,715) from holding American Tower Corp or give up 28.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
8x8 Common Stock vs. American Tower Corp
Performance |
| Timeline |
| 8x8 Common Stock |
| American Tower Corp |
8x8 Common and American Tower Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 8x8 Common and American Tower
The main advantage of trading using opposite 8x8 Common and American Tower positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 8x8 Common 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.| 8x8 Common vs. Workday | 8x8 Common vs. Digital Turbine | 8x8 Common vs. Bill Com Holdings | 8x8 Common vs. Autodesk |
| 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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