Correlation Between SBA Communications and CryoLife

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

Diversification Opportunities for SBA Communications and CryoLife

-0.21

Correlation Coefficient

SBA Communications  CryoLife

Very good diversification

The 3 months correlation between SBA and CryoLife is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding SBA Communications Corp and CryoLife in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CryoLife 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 CryoLife. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CryoLife has no effect on the direction of SBA Communications i.e., SBA Communications and CryoLife go up and down completely randomly.

Pair Corralation between SBA Communications and CryoLife

Assuming the 90 days trading horizon SBA Communications is expected to generate 2.35 times less return on investment than CryoLife. But when comparing it to its historical volatility, SBA Communications Corp is 1.02 times less risky than CryoLife. It trades about 0.05 of its potential returns per unit of risk. CryoLife is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  2,445  in CryoLife on September 3, 2024 and sell it today you would earn a total of  290.00  from holding CryoLife or generate 11.86% 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.  CryoLife

SBA Communications Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SBA Communications Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, SBA Communications is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

CryoLife

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CryoLife are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CryoLife may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with SBA Communications and CryoLife

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

The idea behind SBA Communications Corp and CryoLife 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.