Correlation Between SBA Communications and TOKYO GAS
Can any of the company-specific risk be diversified away by investing in both SBA Communications and TOKYO GAS 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 TOKYO GAS 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 TOKYO GAS, you can compare the effects of market volatilities on SBA Communications and TOKYO GAS 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 TOKYO GAS. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBA Communications and TOKYO GAS.
Diversification Opportunities for SBA Communications and TOKYO GAS
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SBA and TOKYO is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding SBA Communications Corp and TOKYO GAS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TOKYO GAS 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 TOKYO GAS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TOKYO GAS has no effect on the direction of SBA Communications i.e., SBA Communications and TOKYO GAS go up and down completely randomly.
Pair Corralation between SBA Communications and TOKYO GAS
Assuming the 90 days trading horizon SBA Communications Corp is expected to under-perform the TOKYO GAS. But the stock apears to be less risky and, when comparing its historical volatility, SBA Communications Corp is 1.68 times less risky than TOKYO GAS. The stock trades about -0.06 of its potential returns per unit of risk. The TOKYO GAS is currently generating about 0.52 of returns per unit of risk over similar time horizon. If you would invest 1,910 in TOKYO GAS on August 28, 2024 and sell it today you would earn a total of 790.00 from holding TOKYO GAS or generate 41.36% 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. TOKYO GAS
Performance |
| Timeline |
| SBA Communications Corp |
| TOKYO GAS |
SBA Communications and TOKYO GAS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBA Communications and TOKYO GAS
The main advantage of trading using opposite SBA Communications and TOKYO GAS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBA Communications position performs unexpectedly, TOKYO GAS 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 TOKYO GAS will offset losses from the drop in TOKYO GAS's long position.| SBA Communications vs. National Beverage Corp | SBA Communications vs. METHODE ELECTRONICS | SBA Communications vs. MOLSON RS BEVERAGE | SBA Communications vs. ARROW ELECTRONICS |
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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