Correlation Between SBA Communications and CEZ A
Can any of the company-specific risk be diversified away by investing in both SBA Communications and CEZ A 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 CEZ A 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 CEZ a s, you can compare the effects of market volatilities on SBA Communications and CEZ A 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 CEZ A. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBA Communications and CEZ A.
Diversification Opportunities for SBA Communications and CEZ A
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SBA and CEZ is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding SBA Communications Corp and CEZ a s in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CEZ a s 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 CEZ A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CEZ a s has no effect on the direction of SBA Communications i.e., SBA Communications and CEZ A go up and down completely randomly.
Pair Corralation between SBA Communications and CEZ A
Assuming the 90 days trading horizon SBA Communications Corp is expected to under-perform the CEZ A. In addition to that, SBA Communications is 1.05 times more volatile than CEZ a s. It trades about -0.02 of its total potential returns per unit of risk. CEZ a s is currently generating about 0.06 per unit of volatility. If you would invest 2,519 in CEZ a s on September 12, 2024 and sell it today you would earn a total of 1,261 from holding CEZ a s or generate 50.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
SBA Communications Corp vs. CEZ a s
Performance |
| Timeline |
| SBA Communications Corp |
| CEZ a s |
SBA Communications and CEZ A Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBA Communications and CEZ A
The main advantage of trading using opposite SBA Communications and CEZ A positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBA Communications position performs unexpectedly, CEZ A 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 CEZ A will offset losses from the drop in CEZ A's long position.| SBA Communications vs. Apple Inc | SBA Communications vs. Apple Inc | SBA Communications vs. Apple Inc | SBA Communications 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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