Correlation Between SBA Communications and PLAYTECH
Can any of the company-specific risk be diversified away by investing in both SBA Communications and PLAYTECH 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 PLAYTECH 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 PLAYTECH, you can compare the effects of market volatilities on SBA Communications and PLAYTECH 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 PLAYTECH. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBA Communications and PLAYTECH.
Diversification Opportunities for SBA Communications and PLAYTECH
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between SBA and PLAYTECH is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding SBA Communications Corp and PLAYTECH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PLAYTECH 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 PLAYTECH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PLAYTECH has no effect on the direction of SBA Communications i.e., SBA Communications and PLAYTECH go up and down completely randomly.
Pair Corralation between SBA Communications and PLAYTECH
Assuming the 90 days trading horizon SBA Communications is expected to generate 5.13 times less return on investment than PLAYTECH. But when comparing it to its historical volatility, SBA Communications Corp is 1.44 times less risky than PLAYTECH. It trades about 0.01 of its potential returns per unit of risk. PLAYTECH is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 673.00 in PLAYTECH on September 12, 2024 and sell it today you would earn a total of 202.00 from holding PLAYTECH or generate 30.01% 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. PLAYTECH
Performance |
| Timeline |
| SBA Communications Corp |
| PLAYTECH |
SBA Communications and PLAYTECH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBA Communications and PLAYTECH
The main advantage of trading using opposite SBA Communications and PLAYTECH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBA Communications position performs unexpectedly, PLAYTECH 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 PLAYTECH will offset losses from the drop in PLAYTECH's long position.| SBA Communications vs. Apple Inc | SBA Communications vs. Apple Inc | SBA Communications vs. Apple Inc | SBA Communications vs. Apple Inc |
| PLAYTECH vs. Texas Roadhouse | PLAYTECH vs. Cleanaway Waste Management | PLAYTECH vs. AGF Management Limited | PLAYTECH vs. TITANIUM TRANSPORTGROUP |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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