Correlation Between SBA Communications and SolarEdge Technologies
Can any of the company-specific risk be diversified away by investing in both SBA Communications and SolarEdge Technologies 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 SolarEdge Technologies 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 SolarEdge Technologies, you can compare the effects of market volatilities on SBA Communications and SolarEdge Technologies 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 SolarEdge Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBA Communications and SolarEdge Technologies.
Diversification Opportunities for SBA Communications and SolarEdge Technologies
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between SBA and SolarEdge is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding SBA Communications Corp and SolarEdge Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SolarEdge Technologies 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 SolarEdge Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SolarEdge Technologies has no effect on the direction of SBA Communications i.e., SBA Communications and SolarEdge Technologies go up and down completely randomly.
Pair Corralation between SBA Communications and SolarEdge Technologies
Given the investment horizon of 90 days SBA Communications Corp is expected to generate 0.46 times more return on investment than SolarEdge Technologies. However, SBA Communications Corp is 2.17 times less risky than SolarEdge Technologies. It trades about -0.05 of its potential returns per unit of risk. SolarEdge Technologies is currently generating about -0.06 per unit of risk. If you would invest 34,274 in SBA Communications Corp on January 24, 2024 and sell it today you would lose (14,594) from holding SBA Communications Corp or give up 42.58% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
SBA Communications Corp vs. SolarEdge Technologies
Performance |
Timeline |
SBA Communications Corp |
SolarEdge Technologies |
SBA Communications and SolarEdge Technologies Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with SBA Communications and SolarEdge Technologies
The main advantage of trading using opposite SBA Communications and SolarEdge Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBA Communications position performs unexpectedly, SolarEdge Technologies 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 SolarEdge Technologies will offset losses from the drop in SolarEdge Technologies' long position.SBA Communications vs. American Tower Corp | SBA Communications vs. Digital Realty Trust | SBA Communications vs. Equinix | SBA Communications vs. Iron Mountain Incorporated |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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