Correlation Between SBA Communications and LVMH Moët

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

Diversification Opportunities for SBA Communications and LVMH Moët

-0.12

Correlation Coefficient

SBA Communications  LVMH Moët

Good diversification

The 3 months correlation between SBA and LVMH is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding SBA Communications Corp and LVMH Mot Hennessy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LVMH Mot Hennessy 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 LVMH Moët. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LVMH Mot Hennessy has no effect on the direction of SBA Communications i.e., SBA Communications and LVMH Moët go up and down completely randomly.

Pair Corralation between SBA Communications and LVMH Moët

Assuming the 90 days trading horizon SBA Communications Corp is expected to under-perform the LVMH Moët. But the stock apears to be less risky and, when comparing its historical volatility, SBA Communications Corp is 1.22 times less risky than LVMH Moët. The stock trades about -0.18 of its potential returns per unit of risk. The LVMH Mot Hennessy is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  59,790  in LVMH Mot Hennessy on October 7, 2024 and sell it today you would earn a total of  1,260  from holding LVMH Mot Hennessy or generate 2.11% return on investment over 90 days.

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

SBA Communications Corp  vs.  LVMH Mot Hennessy

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.

LVMH Mot Hennessy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LVMH Mot Hennessy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's technical indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with SBA Communications and LVMH Moët

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

The idea behind SBA Communications Corp and LVMH Mot Hennessy 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.