Correlation Between SBA Communications and DATA MODUL

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

Diversification Opportunities for SBA Communications and DATA MODUL

0.29

Correlation Coefficient

SBA Communications  DATA MODUL

Modest diversification

The 3 months correlation between SBA and DATA is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding SBA Communications Corp and DATA MODUL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DATA MODUL 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 DATA MODUL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DATA MODUL has no effect on the direction of SBA Communications i.e., SBA Communications and DATA MODUL go up and down completely randomly.

Pair Corralation between SBA Communications and DATA MODUL

Assuming the 90 days trading horizon SBA Communications Corp is expected to generate 0.73 times more return on investment than DATA MODUL. However, SBA Communications Corp is 1.36 times less risky than DATA MODUL. It trades about -0.12 of its potential returns per unit of risk. DATA MODUL is currently generating about -0.11 per unit of risk. If you would invest  22,214  in SBA Communications Corp on October 22, 2024 and sell it today you would lose (2,419) from holding SBA Communications Corp or give up 10.89% 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.  DATA MODUL

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 fragile 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.

DATA MODUL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DATA MODUL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's primary indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with SBA Communications and DATA MODUL

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

The idea behind SBA Communications Corp and DATA MODUL 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.