Correlation Between SBA Communications and Corporate Travel
Can any of the company-specific risk be diversified away by investing in both SBA Communications and Corporate Travel 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 SBA Communications and Corporate Travel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SBA Communications Corp and Corporate Travel Management, you can compare the effects of market volatilities on SBA Communications and Corporate Travel 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 SBA Communications with a short position of Corporate Travel. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBA Communications and Corporate Travel.
Diversification Opportunities for SBA Communications and Corporate Travel
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SBA and Corporate is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding SBA Communications Corp and Corporate Travel Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corporate Travel Man and SBA Communications 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 SBA Communications Corp are associated (or correlated) with Corporate Travel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corporate Travel Man has no effect on the direction of SBA Communications i.e., SBA Communications and Corporate Travel go up and down completely randomly.
Pair Corralation between SBA Communications and Corporate Travel
Assuming the 90 days trading horizon SBA Communications Corp is expected to under-perform the Corporate Travel. But the stock apears to be less risky and, when comparing its historical volatility, SBA Communications Corp is 1.6 times less risky than Corporate Travel. The stock trades about -0.03 of its potential returns per unit of risk. The Corporate Travel Management is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 750.00 in Corporate Travel Management on September 13, 2024 and sell it today you would earn a total of 70.00 from holding Corporate Travel Management or generate 9.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SBA Communications Corp vs. Corporate Travel Management
Performance |
| Timeline |
| SBA Communications Corp |
| Corporate Travel Man |
SBA Communications and Corporate Travel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBA Communications and Corporate Travel
The main advantage of trading using opposite SBA Communications and Corporate Travel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBA Communications position performs unexpectedly, Corporate Travel 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 Corporate Travel will offset losses from the drop in Corporate Travel's long position.| SBA Communications vs. Apple Inc | SBA Communications vs. Apple Inc | SBA Communications vs. Apple Inc | SBA Communications vs. Apple Inc |
| Corporate Travel vs. Apple Inc | Corporate Travel vs. Apple Inc | Corporate Travel vs. Apple Inc | Corporate Travel vs. Apple Inc |
Check out your portfolio center.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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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