Correlation Between Frontier Communications and SBA Communications

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

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

Diversification Opportunities for Frontier Communications and SBA Communications

0.0

Correlation Coefficient

Frontier Communications  SBA Communications

Pay attention - limited upside

The 3 months correlation between Frontier and SBA is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Frontier Communications 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 Frontier 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 Frontier Communications 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 Frontier Communications i.e., Frontier Communications and SBA Communications go up and down completely randomly.

Pair Corralation between Frontier Communications and SBA Communications

If you would invest (100.00) in Frontier Communications on January 21, 2024 and sell it today you would earn a total of  100.00  from holding Frontier Communications or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Frontier Communications  vs.  SBA Communications Corp

Frontier Communications

Risk-Adjusted Performance

0 of 100

Very Weak

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

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 uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in May 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Frontier Communications and SBA Communications

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

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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.