Correlation Between Lamar Advertising and UNIVERSAL MUSIC
Can any of the company-specific risk be diversified away by investing in both Lamar Advertising and UNIVERSAL MUSIC 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 Lamar Advertising and UNIVERSAL MUSIC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lamar Advertising and UNIVERSAL MUSIC GROUP, you can compare the effects of market volatilities on Lamar Advertising and UNIVERSAL MUSIC 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 Lamar Advertising with a short position of UNIVERSAL MUSIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lamar Advertising and UNIVERSAL MUSIC.
Diversification Opportunities for Lamar Advertising and UNIVERSAL MUSIC
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Lamar and UNIVERSAL is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Lamar Advertising and UNIVERSAL MUSIC GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNIVERSAL MUSIC GROUP and Lamar Advertising 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 Lamar Advertising are associated (or correlated) with UNIVERSAL MUSIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNIVERSAL MUSIC GROUP has no effect on the direction of Lamar Advertising i.e., Lamar Advertising and UNIVERSAL MUSIC go up and down completely randomly.
Pair Corralation between Lamar Advertising and UNIVERSAL MUSIC
Assuming the 90 days trading horizon Lamar Advertising is expected to generate 1.49 times more return on investment than UNIVERSAL MUSIC. However, Lamar Advertising is 1.49 times more volatile than UNIVERSAL MUSIC GROUP. It trades about 0.13 of its potential returns per unit of risk. UNIVERSAL MUSIC GROUP is currently generating about -0.12 per unit of risk. If you would invest 12,100 in Lamar Advertising on September 4, 2024 and sell it today you would earn a total of 600.00 from holding Lamar Advertising or generate 4.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lamar Advertising vs. UNIVERSAL MUSIC GROUP
Performance |
| Timeline |
| Lamar Advertising |
| UNIVERSAL MUSIC GROUP |
Lamar Advertising and UNIVERSAL MUSIC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lamar Advertising and UNIVERSAL MUSIC
The main advantage of trading using opposite Lamar Advertising and UNIVERSAL MUSIC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lamar Advertising position performs unexpectedly, UNIVERSAL MUSIC 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 UNIVERSAL MUSIC will offset losses from the drop in UNIVERSAL MUSIC's long position.| Lamar Advertising vs. Apple Inc | Lamar Advertising vs. Apple Inc | Lamar Advertising vs. Apple Inc | Lamar Advertising vs. Apple Inc |
| UNIVERSAL MUSIC vs. Adtalem Global Education | UNIVERSAL MUSIC vs. Tradeweb Markets | UNIVERSAL MUSIC vs. INTER CARS SA | UNIVERSAL MUSIC vs. RETAIL FOOD GROUP |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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