Correlation Between Universal Entertainment and SBA Communications
Can any of the company-specific risk be diversified away by investing in both Universal Entertainment 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 Universal Entertainment and SBA Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Entertainment and SBA Communications Corp, you can compare the effects of market volatilities on Universal Entertainment 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 Universal Entertainment with a short position of SBA Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Entertainment and SBA Communications.
Diversification Opportunities for Universal Entertainment and SBA Communications
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Universal and SBA is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Universal Entertainment 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 Universal Entertainment 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 Universal Entertainment 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 Universal Entertainment i.e., Universal Entertainment and SBA Communications go up and down completely randomly.
Pair Corralation between Universal Entertainment and SBA Communications
Assuming the 90 days trading horizon Universal Entertainment is expected to under-perform the SBA Communications. In addition to that, Universal Entertainment is 2.91 times more volatile than SBA Communications Corp. It trades about -0.12 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 |
Universal Entertainment vs. SBA Communications Corp
Performance |
| Timeline |
| Universal Entertainment |
| SBA Communications Corp |
Universal Entertainment and SBA Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Entertainment and SBA Communications
The main advantage of trading using opposite Universal Entertainment and SBA Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Entertainment 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.The idea behind Universal Entertainment and SBA Communications Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
Other Complementary Tools
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing |