Correlation Between T Mobile and SBA Communications
Can any of the company-specific risk be diversified away by investing in both T Mobile 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 T Mobile and SBA Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between T Mobile and SBA Communications Corp, you can compare the effects of market volatilities on T Mobile 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 T Mobile with a short position of SBA Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of T Mobile and SBA Communications.
Diversification Opportunities for T Mobile and SBA Communications
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between TMUS and SBA is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding T Mobile 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 T Mobile 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 T Mobile 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 T Mobile i.e., T Mobile and SBA Communications go up and down completely randomly.
Pair Corralation between T Mobile and SBA Communications
Given the investment horizon of 90 days T Mobile is expected to generate 0.65 times more return on investment than SBA Communications. However, T Mobile is 1.53 times less risky than SBA Communications. It trades about 0.04 of its potential returns per unit of risk. SBA Communications Corp is currently generating about -0.04 per unit of risk. If you would invest 12,849 in T Mobile on January 25, 2024 and sell it today you would earn a total of 3,476 from holding T Mobile or generate 27.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
T Mobile vs. SBA Communications Corp
Performance |
| Timeline |
| T Mobile |
| SBA Communications Corp |
T Mobile and SBA Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with T Mobile and SBA Communications
The main advantage of trading using opposite T Mobile and SBA Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T Mobile 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.| T Mobile vs. ATT Inc | T Mobile vs. Comcast Corp | T Mobile vs. Lumen Technologies | T Mobile vs. Verizon Communications |
| 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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