Correlation Between ASOS PLC and SBA Communications
Can any of the company-specific risk be diversified away by investing in both ASOS PLC 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 ASOS PLC and SBA Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ASOS PLC and SBA Communications Corp, you can compare the effects of market volatilities on ASOS PLC 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 ASOS PLC with a short position of SBA Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASOS PLC and SBA Communications.
Diversification Opportunities for ASOS PLC and SBA Communications
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between ASOS and SBA is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding ASOS PLC 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 ASOS PLC 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 ASOS PLC 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 ASOS PLC i.e., ASOS PLC and SBA Communications go up and down completely randomly.
Pair Corralation between ASOS PLC and SBA Communications
Assuming the 90 days horizon ASOS PLC is expected to generate 2.44 times more return on investment than SBA Communications. However, ASOS PLC is 2.44 times more volatile than SBA Communications Corp. It trades about 0.04 of its potential returns per unit of risk. SBA Communications Corp is currently generating about 0.06 per unit of risk. If you would invest 417.00 in ASOS PLC on September 2, 2024 and sell it today you would earn a total of 29.00 from holding ASOS PLC or generate 6.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ASOS PLC vs. SBA Communications Corp
Performance |
| Timeline |
| ASOS PLC |
| SBA Communications Corp |
ASOS PLC and SBA Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ASOS PLC and SBA Communications
The main advantage of trading using opposite ASOS PLC and SBA Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASOS PLC 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.| ASOS PLC vs. SBA Communications Corp | ASOS PLC vs. Universal Insurance Holdings | ASOS PLC vs. The Hanover Insurance | ASOS PLC vs. United Insurance Holdings |
| SBA Communications vs. Apple Inc | SBA Communications vs. Apple Inc | SBA Communications vs. Apple Inc | SBA 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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