Correlation Between SBA Communications and Equinix
Can any of the company-specific risk be diversified away by investing in both SBA Communications and Equinix 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 Equinix 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 Equinix, you can compare the effects of market volatilities on SBA Communications and Equinix 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 Equinix. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBA Communications and Equinix.
Diversification Opportunities for SBA Communications and Equinix
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between SBA and Equinix is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding SBA Communications Corp and Equinix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equinix 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 Equinix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equinix has no effect on the direction of SBA Communications i.e., SBA Communications and Equinix go up and down completely randomly.
Pair Corralation between SBA Communications and Equinix
Given the investment horizon of 90 days SBA Communications Corp is expected to under-perform the Equinix. In addition to that, SBA Communications is 1.15 times more volatile than Equinix. It trades about -0.02 of its total potential returns per unit of risk. Equinix is currently generating about 0.05 per unit of volatility. If you would invest 66,446 in Equinix on August 23, 2024 and sell it today you would earn a total of 25,914 from holding Equinix or generate 39.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SBA Communications Corp vs. Equinix
Performance |
| Timeline |
| SBA Communications Corp |
| Equinix |
SBA Communications and Equinix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBA Communications and Equinix
The main advantage of trading using opposite SBA Communications and Equinix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBA Communications position performs unexpectedly, Equinix 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 Equinix will offset losses from the drop in Equinix'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 |
| Equinix vs. Crown Castle | Equinix vs. American Tower Corp | Equinix vs. Hannon Armstrong Sustainable | Equinix vs. Digital Realty Trust |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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