Correlation Between SBA Communications and Lions Gate
Can any of the company-specific risk be diversified away by investing in both SBA Communications and Lions Gate 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 Lions Gate 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 Lions Gate Entertainment, you can compare the effects of market volatilities on SBA Communications and Lions Gate 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 Lions Gate. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBA Communications and Lions Gate.
Diversification Opportunities for SBA Communications and Lions Gate
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SBA and Lions is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding SBA Communications Corp and Lions Gate Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lions Gate Entertainment 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 Lions Gate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lions Gate Entertainment has no effect on the direction of SBA Communications i.e., SBA Communications and Lions Gate go up and down completely randomly.
Pair Corralation between SBA Communications and Lions Gate
Assuming the 90 days trading horizon SBA Communications is expected to generate 43.06 times less return on investment than Lions Gate. But when comparing it to its historical volatility, SBA Communications Corp is 3.13 times less risky than Lions Gate. It trades about 0.01 of its potential returns per unit of risk. Lions Gate Entertainment is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 650.00 in Lions Gate Entertainment on September 14, 2024 and sell it today you would earn a total of 55.00 from holding Lions Gate Entertainment or generate 8.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SBA Communications Corp vs. Lions Gate Entertainment
Performance |
| Timeline |
| SBA Communications Corp |
| Lions Gate Entertainment |
SBA Communications and Lions Gate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBA Communications and Lions Gate
The main advantage of trading using opposite SBA Communications and Lions Gate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBA Communications position performs unexpectedly, Lions Gate 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 Lions Gate will offset losses from the drop in Lions Gate's long position.| SBA Communications vs. Apple Inc | SBA Communications vs. Apple Inc | SBA Communications vs. Apple Inc | SBA Communications vs. Apple Inc |
| Lions Gate vs. SBA Communications Corp | Lions Gate vs. Bumrungrad Hospital Public | Lions Gate vs. Bausch Health Companies | Lions Gate vs. Gamma Communications plc |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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