Correlation Between WisdomTree Investments and SBA Communications

Can any of the company-specific risk be diversified away by investing in both WisdomTree Investments 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 WisdomTree Investments and SBA Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between WisdomTree Investments and SBA Communications Corp, you can compare the effects of market volatilities on WisdomTree Investments 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 WisdomTree Investments with a short position of SBA Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Investments and SBA Communications.

Diversification Opportunities for WisdomTree Investments and SBA Communications

-0.25

Correlation Coefficient

WisdomTree Investments  SBA Communications

Very good diversification

The 3 months correlation between WisdomTree and SBA is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Investments 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 WisdomTree Investments 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 WisdomTree Investments 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 WisdomTree Investments i.e., WisdomTree Investments and SBA Communications go up and down completely randomly.

Pair Corralation between WisdomTree Investments and SBA Communications

Assuming the 90 days horizon WisdomTree Investments is expected to generate 1.27 times more return on investment than SBA Communications. However, WisdomTree Investments is 1.27 times more volatile than SBA Communications Corp. It trades about 0.32 of its potential returns per unit of risk. SBA Communications Corp is currently generating about -0.02 per unit of risk. If you would invest  738.00  in WisdomTree Investments on April 23, 2025 and sell it today you would earn a total of  386.00  from holding WisdomTree Investments or generate 52.3% return on investment over 90 days.

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

WisdomTree Investments  vs.  SBA Communications Corp

WisdomTree Investments

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree Investments are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, WisdomTree Investments reported solid returns over the last few months and may actually be approaching a breakup point.

SBA Communications Corp

Risk-Adjusted Performance

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 comparatively stable basic indicators, SBA Communications is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with WisdomTree Investments and SBA Communications

The main advantage of trading using opposite WisdomTree Investments and SBA Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Investments 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.

The idea behind WisdomTree Investments and SBA Communications Corp 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.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.