Correlation Between Broadstone Net and American Tower

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

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

Diversification Opportunities for Broadstone Net and American Tower

0.94

Correlation Coefficient

Broadstone Net  American Tower

Almost no diversification

The 3 months correlation between Broadstone and American is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Broadstone Net Lease 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 Broadstone Net 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 Broadstone Net Lease 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 Broadstone Net i.e., Broadstone Net and American Tower go up and down completely randomly.

Pair Corralation between Broadstone Net and American Tower

Considering the 90-day investment horizon Broadstone Net Lease is expected to generate 0.7 times more return on investment than American Tower. However, Broadstone Net Lease is 1.43 times less risky than American Tower. It trades about 0.03 of its potential returns per unit of risk. American Tower Corp is currently generating about -0.02 per unit of risk. If you would invest  1,549  in Broadstone Net Lease on September 22, 2024 and sell it today you would earn a total of  58.00  from holding Broadstone Net Lease or generate 3.74% return on investment over 90 days.

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

Broadstone Net Lease  vs.  American Tower Corp

Broadstone Net Lease

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Broadstone Net Lease has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

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 January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Broadstone Net and American Tower

The main advantage of trading using opposite Broadstone Net and American Tower positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Broadstone Net 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 Broadstone Net Lease 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.