Correlation Between SBA Communications and Liberty Broadband
Can any of the company-specific risk be diversified away by investing in both SBA Communications and Liberty Broadband 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 Liberty Broadband 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 Liberty Broadband Srs, you can compare the effects of market volatilities on SBA Communications and Liberty Broadband 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 Liberty Broadband. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBA Communications and Liberty Broadband.
Diversification Opportunities for SBA Communications and Liberty Broadband
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SBA and Liberty is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding SBA Communications Corp and Liberty Broadband Srs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Broadband Srs 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 Liberty Broadband. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liberty Broadband Srs has no effect on the direction of SBA Communications i.e., SBA Communications and Liberty Broadband go up and down completely randomly.
Pair Corralation between SBA Communications and Liberty Broadband
Given the investment horizon of 90 days SBA Communications Corp is expected to generate 0.93 times more return on investment than Liberty Broadband. However, SBA Communications Corp is 1.07 times less risky than Liberty Broadband. It trades about -0.23 of its potential returns per unit of risk. Liberty Broadband Srs is currently generating about -0.32 per unit of risk. If you would invest 21,572 in SBA Communications Corp on January 20, 2024 and sell it today you would lose (1,966) from holding SBA Communications Corp or give up 9.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SBA Communications Corp vs. Liberty Broadband Srs
Performance |
| Timeline |
| SBA Communications Corp |
| Liberty Broadband Srs |
SBA Communications and Liberty Broadband Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBA Communications and Liberty Broadband
The main advantage of trading using opposite SBA Communications and Liberty Broadband positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBA Communications position performs unexpectedly, Liberty Broadband 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 Liberty Broadband will offset losses from the drop in Liberty Broadband'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 |
| Liberty Broadband vs. Liberty Global PLC | Liberty Broadband vs. Shenandoah Telecommunications Co | Liberty Broadband vs. Liberty Global PLC | Liberty Broadband vs. Liberty Latin America |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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