Correlation Between KINGBOARD CHEMICAL and SBA Communications
Can any of the company-specific risk be diversified away by investing in both KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL and SBA Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KINGBOARD CHEMICAL and SBA Communications Corp, you can compare the effects of market volatilities on KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL with a short position of SBA Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of KINGBOARD CHEMICAL and SBA Communications.
Diversification Opportunities for KINGBOARD CHEMICAL and SBA Communications
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between KINGBOARD and SBA is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL i.e., KINGBOARD CHEMICAL and SBA Communications go up and down completely randomly.
Pair Corralation between KINGBOARD CHEMICAL and SBA Communications
Assuming the 90 days trading horizon KINGBOARD CHEMICAL is expected to under-perform the SBA Communications. In addition to that, KINGBOARD CHEMICAL is 1.17 times more volatile than SBA Communications Corp. It trades about -0.01 of its total potential returns per unit of risk. SBA Communications Corp is currently generating about 0.08 per unit of volatility. If you would invest 20,980 in SBA Communications Corp on September 1, 2024 and sell it today you would earn a total of 600.00 from holding SBA Communications Corp or generate 2.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KINGBOARD CHEMICAL vs. SBA Communications Corp
Performance |
| Timeline |
| KINGBOARD CHEMICAL |
| SBA Communications Corp |
KINGBOARD CHEMICAL and SBA Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KINGBOARD CHEMICAL and SBA Communications
The main advantage of trading using opposite KINGBOARD CHEMICAL and SBA Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KINGBOARD CHEMICAL 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.| KINGBOARD CHEMICAL vs. TSOGO SUN GAMING | KINGBOARD CHEMICAL vs. NEWELL RUBBERMAID | KINGBOARD CHEMICAL vs. Boyd Gaming | KINGBOARD CHEMICAL vs. Martin Marietta Materials |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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