Correlation Between SBA Communications and Merit Medical
Can any of the company-specific risk be diversified away by investing in both SBA Communications and Merit Medical 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 Merit Medical 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 Merit Medical Systems, you can compare the effects of market volatilities on SBA Communications and Merit Medical 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 Merit Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBA Communications and Merit Medical.
Diversification Opportunities for SBA Communications and Merit Medical
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SBA and Merit is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding SBA Communications Corp and Merit Medical Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merit Medical Systems 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 Merit Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merit Medical Systems has no effect on the direction of SBA Communications i.e., SBA Communications and Merit Medical go up and down completely randomly.
Pair Corralation between SBA Communications and Merit Medical
Assuming the 90 days trading horizon SBA Communications is expected to generate 2.92 times less return on investment than Merit Medical. In addition to that, SBA Communications is 1.2 times more volatile than Merit Medical Systems. It trades about 0.05 of its total potential returns per unit of risk. Merit Medical Systems is currently generating about 0.16 per unit of volatility. If you would invest 6,650 in Merit Medical Systems on September 3, 2024 and sell it today you would earn a total of 3,100 from holding Merit Medical Systems or generate 46.62% 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. Merit Medical Systems
Performance |
| Timeline |
| SBA Communications Corp |
| Merit Medical Systems |
SBA Communications and Merit Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBA Communications and Merit Medical
The main advantage of trading using opposite SBA Communications and Merit Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBA Communications position performs unexpectedly, Merit Medical 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 Merit Medical will offset losses from the drop in Merit Medical's long position.| SBA Communications vs. Luckin Coffee | SBA Communications vs. REVO INSURANCE SPA | SBA Communications vs. Selective Insurance Group | SBA Communications vs. Goosehead Insurance |
| Merit Medical vs. Apple Inc | Merit Medical vs. Apple Inc | Merit Medical vs. Apple Inc | Merit Medical 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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