Correlation Between ATT and SBA Communications
Can any of the company-specific risk be diversified away by investing in both ATT 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 ATT and SBA Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ATT Inc and SBA Communications Corp, you can compare the effects of market volatilities on ATT 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 ATT with a short position of SBA Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATT and SBA Communications.
Diversification Opportunities for ATT and SBA Communications
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between ATT and SBA is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc 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 ATT 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 ATT Inc 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 ATT i.e., ATT and SBA Communications go up and down completely randomly.
Pair Corralation between ATT and SBA Communications
Taking into account the 90-day investment horizon ATT Inc is expected to generate 0.7 times more return on investment than SBA Communications. However, ATT Inc is 1.42 times less risky than SBA Communications. It trades about 0.09 of its potential returns per unit of risk. SBA Communications Corp is currently generating about 0.02 per unit of risk. If you would invest 1,447 in ATT Inc on January 20, 2024 and sell it today you would earn a total of 204.00 from holding ATT Inc or generate 14.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ATT Inc vs. SBA Communications Corp
Performance |
| Timeline |
| ATT Inc |
| SBA Communications Corp |
ATT and SBA Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ATT and SBA Communications
The main advantage of trading using opposite ATT and SBA Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT 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.| ATT vs. Grab Holdings | ATT vs. Cadence Design Systems | ATT vs. Aquagold International | ATT vs. Thrivent High Yield |
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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