Correlation Between SBA Communications and Focus Home

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

Diversification Opportunities for SBA Communications and Focus Home

-0.11

Correlation Coefficient

SBA Communications  Focus Home

Good diversification

The 3 months correlation between SBA and Focus is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding SBA Communications Corp and Focus Home Interactive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Focus Home Interactive 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 Focus Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Focus Home Interactive has no effect on the direction of SBA Communications i.e., SBA Communications and Focus Home go up and down completely randomly.

Pair Corralation between SBA Communications and Focus Home

Assuming the 90 days trading horizon SBA Communications is expected to generate 34.56 times less return on investment than Focus Home. But when comparing it to its historical volatility, SBA Communications Corp is 1.9 times less risky than Focus Home. It trades about 0.01 of its potential returns per unit of risk. Focus Home Interactive is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  1,556  in Focus Home Interactive on April 22, 2025 and sell it today you would earn a total of  809.00  from holding Focus Home Interactive or generate 51.99% 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.  Focus Home Interactive

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.

Focus Home Interactive

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Focus Home Interactive are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Focus Home reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SBA Communications and Focus Home

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

The idea behind SBA Communications Corp and Focus Home Interactive 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..