Correlation Between SBA Communications and EPR Properties

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

Diversification Opportunities for SBA Communications and EPR Properties

0.87

Correlation Coefficient

SBA Communications  EPR Properties

Very poor diversification

The 3 months correlation between SBA and EPR is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding SBA Communications Corp and EPR Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EPR Properties 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 EPR Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EPR Properties has no effect on the direction of SBA Communications i.e., SBA Communications and EPR Properties go up and down completely randomly.

Pair Corralation between SBA Communications and EPR Properties

Given the investment horizon of 90 days SBA Communications Corp is expected to generate 1.28 times more return on investment than EPR Properties. However, SBA Communications is 1.28 times more volatile than EPR Properties. It trades about -0.04 of its potential returns per unit of risk. EPR Properties is currently generating about -0.05 per unit of risk. If you would invest  23,217  in SBA Communications Corp on September 4, 2024 and sell it today you would lose (923.00) from holding SBA Communications Corp or give up 3.98% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

SBA Communications Corp  vs.  EPR Properties

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 rather sound basic indicators, SBA Communications is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

EPR Properties

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EPR Properties has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, EPR Properties is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with SBA Communications and EPR Properties

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

The idea behind SBA Communications Corp and EPR Properties 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.