Correlation Between SBA Communications and Sportsmans Warehouse

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

Diversification Opportunities for SBA Communications and Sportsmans Warehouse

-0.07

Correlation Coefficient

SBA Communications  Sportsmans Warehouse

Good diversification

The 3 months correlation between SBA and Sportsmans is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding SBA Communications Corp and Sportsmans Warehouse Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sportsmans Warehouse 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 Sportsmans Warehouse. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sportsmans Warehouse has no effect on the direction of SBA Communications i.e., SBA Communications and Sportsmans Warehouse go up and down completely randomly.

Pair Corralation between SBA Communications and Sportsmans Warehouse

Assuming the 90 days trading horizon SBA Communications Corp is expected to under-perform the Sportsmans Warehouse. But the stock apears to be less risky and, when comparing its historical volatility, SBA Communications Corp is 2.04 times less risky than Sportsmans Warehouse. The stock trades about -0.09 of its potential returns per unit of risk. The Sportsmans Warehouse Holdings is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  296.00  in Sportsmans Warehouse Holdings on March 2, 2024 and sell it today you would earn a total of  16.00  from holding Sportsmans Warehouse Holdings or generate 5.41% 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.  Sportsmans Warehouse Holdings

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.

Sportsmans Warehouse

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sportsmans Warehouse Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Sportsmans Warehouse is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with SBA Communications and Sportsmans Warehouse

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

The idea behind SBA Communications Corp and Sportsmans Warehouse Holdings 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.