Correlation Between SBA Communications and Rogers Communications
Can any of the company-specific risk be diversified away by investing in both SBA Communications and Rogers Communications 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 Rogers Communications 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 Rogers Communications, you can compare the effects of market volatilities on SBA Communications and Rogers Communications 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 Rogers Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBA Communications and Rogers Communications.
Diversification Opportunities for SBA Communications and Rogers Communications
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between SBA and Rogers is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding SBA Communications Corp and Rogers Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rogers Communications 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 Rogers Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rogers Communications has no effect on the direction of SBA Communications i.e., SBA Communications and Rogers Communications go up and down completely randomly.
Pair Corralation between SBA Communications and Rogers Communications
Assuming the 90 days trading horizon SBA Communications Corp is expected to generate 1.37 times more return on investment than Rogers Communications. However, SBA Communications is 1.37 times more volatile than Rogers Communications. It trades about 0.02 of its potential returns per unit of risk. Rogers Communications is currently generating about -0.02 per unit of risk. If you would invest 20,526 in SBA Communications Corp on August 31, 2024 and sell it today you would earn a total of 1,054 from holding SBA Communications Corp or generate 5.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.74% |
| Values | Daily Returns |
SBA Communications Corp vs. Rogers Communications
Performance |
| Timeline |
| SBA Communications Corp |
| Rogers Communications |
SBA Communications and Rogers Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBA Communications and Rogers Communications
The main advantage of trading using opposite SBA Communications and Rogers Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBA Communications position performs unexpectedly, Rogers Communications 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 Rogers Communications will offset losses from the drop in Rogers Communications' long position.| SBA Communications vs. Apple Inc | SBA Communications vs. Apple Inc | SBA Communications vs. Apple Inc | SBA Communications vs. Apple Inc |
| Rogers Communications vs. Apple Inc | Rogers Communications vs. Apple Inc | Rogers Communications vs. Apple Inc | Rogers Communications 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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