Correlation Between Iron Mountain and SBA Communications

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Can any of the company-specific risk be diversified away by investing in both Iron Mountain 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 Iron Mountain and SBA Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iron Mountain Incorporated and SBA Communications Corp, you can compare the effects of market volatilities on Iron Mountain 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 Iron Mountain with a short position of SBA Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iron Mountain and SBA Communications.

Diversification Opportunities for Iron Mountain and SBA Communications

-0.46
  Correlation Coefficient

Very good diversification

The 3 months correlation between Iron and SBA is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Iron Mountain Incorporated 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 Iron Mountain 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 Iron Mountain Incorporated 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 Iron Mountain i.e., Iron Mountain and SBA Communications go up and down completely randomly.

Pair Corralation between Iron Mountain and SBA Communications

Considering the 90-day investment horizon Iron Mountain Incorporated is expected to generate 0.8 times more return on investment than SBA Communications. However, Iron Mountain Incorporated is 1.26 times less risky than SBA Communications. It trades about 0.15 of its potential returns per unit of risk. SBA Communications Corp is currently generating about 0.0 per unit of risk. If you would invest  5,339  in Iron Mountain Incorporated on December 30, 2023 and sell it today you would earn a total of  2,682  from holding Iron Mountain Incorporated or generate 50.23% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Iron Mountain Incorporated  vs.  SBA Communications Corp

 Performance 
       Timeline  
Iron Mountain rporated 

Risk-Adjusted Performance

12 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Iron Mountain Incorporated are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Iron Mountain displayed solid returns over the last few months and may actually be approaching a breakup point.
SBA Communications Corp 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days SBA Communications Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Iron Mountain and SBA Communications Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Iron Mountain and SBA Communications

The main advantage of trading using opposite Iron Mountain and SBA Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iron Mountain 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.
The idea behind Iron Mountain Incorporated and SBA Communications Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.

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