Correlation Between City Office and SBA Communications
Can any of the company-specific risk be diversified away by investing in both City Office and SBA 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 City Office and SBA Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between City Office and SBA Communications Corp, you can compare the effects of market volatilities on City Office and SBA 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 City Office with a short position of SBA Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of City Office and SBA Communications.
Diversification Opportunities for City Office and SBA Communications
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between City and SBA is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding City Office and SBA Communications Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBA Communications Corp and City Office 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 City Office are associated (or correlated) with SBA Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SBA Communications Corp has no effect on the direction of City Office i.e., City Office and SBA Communications go up and down completely randomly.
Pair Corralation between City Office and SBA Communications
Considering the 90-day investment horizon City Office is expected to generate 1.77 times more return on investment than SBA Communications. However, City Office is 1.77 times more volatile than SBA Communications Corp. It trades about 0.0 of its potential returns per unit of risk. SBA Communications Corp is currently generating about -0.01 per unit of risk. If you would invest 789.00 in City Office on August 30, 2024 and sell it today you would lose (217.00) from holding City Office or give up 27.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
City Office vs. SBA Communications Corp
Performance |
| Timeline |
| City Office |
| SBA Communications Corp |
City Office and SBA Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with City Office and SBA Communications
The main advantage of trading using opposite City Office and SBA Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if City Office position performs unexpectedly, SBA 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 SBA Communications will offset losses from the drop in SBA Communications' long position.| City Office vs. Hudson Pacific Properties | City Office vs. Piedmont Office Realty | City Office vs. Office Properties Income | City Office vs. Kilroy Realty Corp |
| SBA Communications vs. American Tower Corp | SBA Communications vs. Digital Realty Trust | SBA Communications vs. Equinix | SBA Communications vs. Iron Mountain Incorporated |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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