Correlation Between Iron Mountain and American Tower

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

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

Diversification Opportunities for Iron Mountain and American Tower

-0.73

Correlation Coefficient

Iron Mountain  American Tower

Pay attention - limited upside

The 3 months correlation between Iron and American is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Iron Mountain Incorporated 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 Iron Mountain 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 Iron Mountain Incorporated 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 Iron Mountain i.e., Iron Mountain and American Tower go up and down completely randomly.

Pair Corralation between Iron Mountain and American Tower

Considering the 90-day investment horizon Iron Mountain Incorporated is expected to generate 1.08 times more return on investment than American Tower. However, Iron Mountain is 1.08 times more volatile than American Tower Corp. It trades about 0.08 of its potential returns per unit of risk. American Tower Corp is currently generating about 0.03 per unit of risk. If you would invest  5,147  in Iron Mountain Incorporated on February 2, 2025 and sell it today you would earn a total of  4,429  from holding Iron Mountain Incorporated or generate 86.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Iron Mountain Incorporated  vs.  American Tower Corp

Iron Mountain

Risk-Adjusted Performance

Very Weak

Over the last 90 days Iron Mountain Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Iron Mountain is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

American Tower Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in American Tower Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak primary indicators, American Tower unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Iron Mountain and American Tower

The main advantage of trading using opposite Iron Mountain and American Tower positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iron Mountain 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.

The idea behind Iron Mountain Incorporated and American Tower Corp 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.