Correlation Between SBA Communications and Lundin Energy
Can any of the company-specific risk be diversified away by investing in both SBA Communications and Lundin Energy 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 Lundin Energy 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 Lundin Energy AB, you can compare the effects of market volatilities on SBA Communications and Lundin Energy 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 Lundin Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBA Communications and Lundin Energy.
Diversification Opportunities for SBA Communications and Lundin Energy
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SBA and Lundin is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding SBA Communications Corp and Lundin Energy AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lundin Energy AB 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 Lundin Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lundin Energy AB has no effect on the direction of SBA Communications i.e., SBA Communications and Lundin Energy go up and down completely randomly.
Pair Corralation between SBA Communications and Lundin Energy
Assuming the 90 days trading horizon SBA Communications Corp is expected to generate 0.54 times more return on investment than Lundin Energy. However, SBA Communications Corp is 1.87 times less risky than Lundin Energy. It trades about 0.32 of its potential returns per unit of risk. Lundin Energy AB is currently generating about -0.12 per unit of risk. If you would invest 18,605 in SBA Communications Corp on November 27, 2024 and sell it today you would earn a total of 1,735 from holding SBA Communications Corp 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. Lundin Energy AB
Performance |
| Timeline |
| SBA Communications Corp |
| Lundin Energy AB |
SBA Communications and Lundin Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBA Communications and Lundin Energy
The main advantage of trading using opposite SBA Communications and Lundin Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBA Communications position performs unexpectedly, Lundin Energy 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 Lundin Energy will offset losses from the drop in Lundin Energy's long position.| SBA Communications vs. Tradeweb Markets | SBA Communications vs. Cognizant Technology Solutions | SBA Communications vs. RETAIL FOOD GROUP | SBA Communications vs. FLOW TRADERS LTD |
| Lundin Energy vs. OFFICE DEPOT | Lundin Energy vs. PURETECH HEALTH PLC | Lundin Energy vs. CENTURIA OFFICE REIT | Lundin Energy vs. EPSILON HEALTHCARE LTD |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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