Correlation Between SBA Communications and Imperial Brands
Can any of the company-specific risk be diversified away by investing in both SBA Communications and Imperial Brands 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 Imperial Brands 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 Imperial Brands PLC, you can compare the effects of market volatilities on SBA Communications and Imperial Brands 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 Imperial Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBA Communications and Imperial Brands.
Diversification Opportunities for SBA Communications and Imperial Brands
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between SBA and Imperial is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding SBA Communications Corp and Imperial Brands PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Imperial Brands PLC 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 Imperial Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Imperial Brands PLC has no effect on the direction of SBA Communications i.e., SBA Communications and Imperial Brands go up and down completely randomly.
Pair Corralation between SBA Communications and Imperial Brands
Assuming the 90 days trading horizon SBA Communications Corp is expected to under-perform the Imperial Brands. In addition to that, SBA Communications is 1.34 times more volatile than Imperial Brands PLC. It trades about -0.03 of its total potential returns per unit of risk. Imperial Brands PLC is currently generating about 0.36 per unit of volatility. If you would invest 2,502 in Imperial Brands PLC on September 5, 2024 and sell it today you would earn a total of 573.00 from holding Imperial Brands PLC or generate 22.9% 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. Imperial Brands PLC
Performance |
| Timeline |
| SBA Communications Corp |
| Imperial Brands PLC |
SBA Communications and Imperial Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBA Communications and Imperial Brands
The main advantage of trading using opposite SBA Communications and Imperial Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBA Communications position performs unexpectedly, Imperial Brands 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 Imperial Brands will offset losses from the drop in Imperial Brands' long position.| SBA Communications vs. Apple Inc | SBA Communications vs. Apple Inc | SBA Communications vs. Apple Inc | SBA Communications vs. Apple Inc |
| Imperial Brands vs. INTERCONT HOTELS | Imperial Brands vs. Charter Communications | Imperial Brands vs. Pebblebrook Hotel Trust | Imperial Brands vs. SBA Communications Corp |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
Other Complementary Tools
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges |