Correlation Between American Tower and W P

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

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

Diversification Opportunities for American Tower and W P

0.55

Correlation Coefficient

American Tower  W P

Very weak diversification

The 3 months correlation between American and WPC is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding American Tower Corp and W P Carey in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on W P Carey and American Tower 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 American Tower Corp are associated (or correlated) with W P. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of W P Carey has no effect on the direction of American Tower i.e., American Tower and W P go up and down completely randomly.

Pair Corralation between American Tower and W P

Considering the 90-day investment horizon American Tower Corp is expected to generate 1.1 times more return on investment than W P. However, American Tower is 1.1 times more volatile than W P Carey. It trades about 0.05 of its potential returns per unit of risk. W P Carey is currently generating about 0.04 per unit of risk. If you would invest  15,742  in American Tower Corp on January 18, 2024 and sell it today you would earn a total of  1,479  from holding American Tower Corp or generate 9.4% return on investment over 90 days.

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

American Tower Corp  vs.  W P Carey

American Tower Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days American Tower Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's primary indicators remain comparatively stable which may send shares a bit higher in May 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

W P Carey

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days W P Carey has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in May 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with American Tower and W P

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

The idea behind American Tower Corp and W P Carey 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.