Correlation Between Crown Castle and BRT Realty

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

By analyzing existing cross correlation between Crown Castle and BRT Realty Trust, you can compare the effects of market volatilities on Crown Castle and BRT Realty 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 Castle with a short position of BRT Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crown Castle and BRT Realty.

Diversification Opportunities for Crown Castle and BRT Realty

-0.82

Correlation Coefficient

Crown Castle  BRT Realty

Pay attention - limited upside

The 3 months correlation between Crown and BRT is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Crown Castle and BRT Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRT Realty Trust and Crown Castle 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 are associated (or correlated) with BRT Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRT Realty Trust has no effect on the direction of Crown Castle i.e., Crown Castle and BRT Realty go up and down completely randomly.

Pair Corralation between Crown Castle and BRT Realty

Considering the 90-day investment horizon Crown Castle is expected to under-perform the BRT Realty. But the stock apears to be less risky and, when comparing its historical volatility, Crown Castle is 1.59 times less risky than BRT Realty. The stock trades about -0.15 of its potential returns per unit of risk. The BRT Realty Trust is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  1,662  in BRT Realty Trust on February 4, 2024 and sell it today you would earn a total of  186.00  from holding BRT Realty Trust or generate 11.19% return on investment over 90 days.

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

Crown Castle  vs.  BRT Realty Trust

Crown Castle

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crown Castle has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

BRT Realty Trust

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BRT Realty Trust are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, BRT Realty unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Crown Castle and BRT Realty

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

The idea behind Crown Castle and BRT Realty 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.

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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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.