Correlation Between THRACE PLASTICS and SBA Communications
Can any of the company-specific risk be diversified away by investing in both THRACE PLASTICS 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 THRACE PLASTICS and SBA Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between THRACE PLASTICS and SBA Communications Corp, you can compare the effects of market volatilities on THRACE PLASTICS 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 THRACE PLASTICS with a short position of SBA Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of THRACE PLASTICS and SBA Communications.
Diversification Opportunities for THRACE PLASTICS and SBA Communications
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between THRACE and SBA is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding THRACE PLASTICS 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 THRACE PLASTICS 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 THRACE PLASTICS 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 THRACE PLASTICS i.e., THRACE PLASTICS and SBA Communications go up and down completely randomly.
Pair Corralation between THRACE PLASTICS and SBA Communications
Assuming the 90 days trading horizon THRACE PLASTICS is expected to generate 0.94 times more return on investment than SBA Communications. However, THRACE PLASTICS is 1.06 times less risky than SBA Communications. It trades about 0.02 of its potential returns per unit of risk. SBA Communications Corp is currently generating about -0.01 per unit of risk. If you would invest 356.00 in THRACE PLASTICS on August 29, 2024 and sell it today you would earn a total of 38.00 from holding THRACE PLASTICS or generate 10.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
THRACE PLASTICS vs. SBA Communications Corp
Performance |
| Timeline |
| THRACE PLASTICS |
| SBA Communications Corp |
THRACE PLASTICS and SBA Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with THRACE PLASTICS and SBA Communications
The main advantage of trading using opposite THRACE PLASTICS and SBA Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if THRACE PLASTICS 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.| THRACE PLASTICS vs. Algonquin Power Utilities | THRACE PLASTICS vs. CARSALESCOM | THRACE PLASTICS vs. PACIFIC ONLINE | THRACE PLASTICS vs. SALESFORCE INC CDR |
| SBA Communications vs. KINGBOARD CHEMICAL | SBA Communications vs. AIR PRODCHEMICALS | SBA Communications vs. THRACE PLASTICS | SBA Communications vs. EAGLE 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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