Correlation Between Crown Castle and Hannon Armstrong

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

By analyzing existing cross correlation between Crown Castle and Hannon Armstrong Sustainable, you can compare the effects of market volatilities on Crown Castle and Hannon Armstrong 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 Hannon Armstrong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crown Castle and Hannon Armstrong.

Diversification Opportunities for Crown Castle and Hannon Armstrong

0.35

Correlation Coefficient

Crown Castle  Hannon Armstrong

Weak diversification

The 3 months correlation between Crown and Hannon is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Crown Castle and Hannon Armstrong Sustainable in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hannon Armstrong Sus 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 Hannon Armstrong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hannon Armstrong Sus has no effect on the direction of Crown Castle i.e., Crown Castle and Hannon Armstrong go up and down completely randomly.

Pair Corralation between Crown Castle and Hannon Armstrong

Considering the 90-day investment horizon Crown Castle is expected to generate 0.54 times more return on investment than Hannon Armstrong. However, Crown Castle is 1.86 times less risky than Hannon Armstrong. It trades about -0.11 of its potential returns per unit of risk. Hannon Armstrong Sustainable is currently generating about -0.23 per unit of risk. If you would invest  11,081  in Crown Castle on August 12, 2024 and sell it today you would lose (496.00) from holding Crown Castle or give up 4.48% of portfolio value over 90 days.

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

Crown Castle  vs.  Hannon Armstrong Sustainable

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 fairly strong fundamental indicators, Crown Castle is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Hannon Armstrong Sus

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hannon Armstrong Sustainable has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Hannon Armstrong is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Crown Castle and Hannon Armstrong

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

The idea behind Crown Castle and Hannon Armstrong Sustainable 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.