Correlation Between SBA Communications and AFC Gamma
Can any of the company-specific risk be diversified away by investing in both SBA Communications and AFC Gamma 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 AFC Gamma 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 AFC Gamma, you can compare the effects of market volatilities on SBA Communications and AFC Gamma 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 AFC Gamma. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBA Communications and AFC Gamma.
Diversification Opportunities for SBA Communications and AFC Gamma
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SBA and AFC is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding SBA Communications Corp and AFC Gamma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AFC Gamma 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 AFC Gamma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AFC Gamma has no effect on the direction of SBA Communications i.e., SBA Communications and AFC Gamma go up and down completely randomly.
Pair Corralation between SBA Communications and AFC Gamma
Given the investment horizon of 90 days SBA Communications is expected to generate 5.91 times less return on investment than AFC Gamma. But when comparing it to its historical volatility, SBA Communications Corp is 1.1 times less risky than AFC Gamma. It trades about 0.02 of its potential returns per unit of risk. AFC Gamma is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 709.00 in AFC Gamma on August 28, 2024 and sell it today you would earn a total of 253.00 from holding AFC Gamma or generate 35.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SBA Communications Corp vs. AFC Gamma
Performance |
| Timeline |
| SBA Communications Corp |
| AFC Gamma |
SBA Communications and AFC Gamma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBA Communications and AFC Gamma
The main advantage of trading using opposite SBA Communications and AFC Gamma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBA Communications position performs unexpectedly, AFC Gamma 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 AFC Gamma will offset losses from the drop in AFC Gamma's long position.| SBA Communications vs. American Tower Corp | SBA Communications vs. Digital Realty Trust | SBA Communications vs. Equinix | SBA Communications vs. Iron Mountain Incorporated |
| AFC Gamma vs. Newlake Capital Partners | AFC Gamma vs. SBA Communications Corp | AFC Gamma vs. Gladstone Land | AFC Gamma vs. Lamar Advertising |
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 Stocks Directory module to find actively traded stocks across global markets.
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