Correlation Between SBA Communications and T Mobile
Can any of the company-specific risk be diversified away by investing in both SBA Communications and T Mobile 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 T Mobile 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 T Mobile, you can compare the effects of market volatilities on SBA Communications and T Mobile 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 T Mobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBA Communications and T Mobile.
Diversification Opportunities for SBA Communications and T Mobile
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between SBA and TMUS is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding SBA Communications Corp and T Mobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T Mobile 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 T Mobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of T Mobile has no effect on the direction of SBA Communications i.e., SBA Communications and T Mobile go up and down completely randomly.
Pair Corralation between SBA Communications and T Mobile
Given the investment horizon of 90 days SBA Communications is expected to generate 3.72 times less return on investment than T Mobile. In addition to that, SBA Communications is 2.67 times more volatile than T Mobile. It trades about 0.02 of its total potential returns per unit of risk. T Mobile is currently generating about 0.19 per unit of volatility. If you would invest 13,660 in T Mobile on January 19, 2024 and sell it today you would earn a total of 2,349 from holding T Mobile or generate 17.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SBA Communications Corp vs. T Mobile
Performance |
| Timeline |
| SBA Communications Corp |
| T Mobile |
SBA Communications and T Mobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBA Communications and T Mobile
The main advantage of trading using opposite SBA Communications and T Mobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBA Communications position performs unexpectedly, T Mobile 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 T Mobile will offset losses from the drop in T Mobile'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 |
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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