Correlation Between SBA Communications and CSX
Can any of the company-specific risk be diversified away by investing in both SBA Communications and CSX 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 CSX 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 CSX Corporation, you can compare the effects of market volatilities on SBA Communications and CSX 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 CSX. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBA Communications and CSX.
Diversification Opportunities for SBA Communications and CSX
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SBA and CSX is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding SBA Communications Corp and CSX Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSX Corporation 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 CSX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSX Corporation has no effect on the direction of SBA Communications i.e., SBA Communications and CSX go up and down completely randomly.
Pair Corralation between SBA Communications and CSX
Assuming the 90 days trading horizon SBA Communications Corp is expected to under-perform the CSX. In addition to that, SBA Communications is 1.12 times more volatile than CSX Corporation. It trades about -0.01 of its total potential returns per unit of risk. CSX Corporation is currently generating about 0.02 per unit of volatility. If you would invest 3,089 in CSX Corporation on September 14, 2024 and sell it today you would earn a total of 128.00 from holding CSX Corporation or generate 4.14% 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. CSX Corp.
Performance |
| Timeline |
| SBA Communications Corp |
| CSX Corporation |
SBA Communications and CSX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBA Communications and CSX
The main advantage of trading using opposite SBA Communications and CSX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBA Communications position performs unexpectedly, CSX 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 CSX will offset losses from the drop in CSX's long position.| SBA Communications vs. Apple Inc | SBA Communications vs. Apple Inc | SBA Communications vs. Apple Inc | SBA Communications vs. Apple Inc |
| CSX vs. Hitachi Construction Machinery | CSX vs. GALENA MINING LTD | CSX vs. MCEWEN MINING INC | CSX vs. Federal Agricultural Mortgage |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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