Correlation Between SBA Communications and CyberAgent

Can any of the company-specific risk be diversified away by investing in both SBA Communications and CyberAgent 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 CyberAgent 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 CyberAgent, you can compare the effects of market volatilities on SBA Communications and CyberAgent 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 CyberAgent. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBA Communications and CyberAgent.

Diversification Opportunities for SBA Communications and CyberAgent

-0.5

Correlation Coefficient

SBA Communications  CyberAgent

Very good diversification

The 3 months correlation between SBA and CyberAgent is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding SBA Communications Corp and CyberAgent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CyberAgent 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 CyberAgent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CyberAgent has no effect on the direction of SBA Communications i.e., SBA Communications and CyberAgent go up and down completely randomly.

Pair Corralation between SBA Communications and CyberAgent

Assuming the 90 days trading horizon SBA Communications Corp is expected to under-perform the CyberAgent. But the stock apears to be less risky and, when comparing its historical volatility, SBA Communications Corp is 1.45 times less risky than CyberAgent. The stock trades about -0.44 of its potential returns per unit of risk. The CyberAgent is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  665.00  in CyberAgent on October 4, 2024 and sell it today you would lose (5.00) from holding CyberAgent or give up 0.75% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

SBA Communications Corp  vs.  CyberAgent

SBA Communications Corp

Risk-Adjusted Performance

0 of 100

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 latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

CyberAgent

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CyberAgent are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, CyberAgent may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with SBA Communications and CyberAgent

The main advantage of trading using opposite SBA Communications and CyberAgent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBA Communications position performs unexpectedly, CyberAgent 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 CyberAgent will offset losses from the drop in CyberAgent's long position.

The idea behind SBA Communications Corp and CyberAgent 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.

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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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.