Correlation Between Lamar Advertising and SOGECLAIR
Can any of the company-specific risk be diversified away by investing in both Lamar Advertising and SOGECLAIR 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 SOGECLAIR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lamar Advertising and SOGECLAIR SA INH, you can compare the effects of market volatilities on Lamar Advertising and SOGECLAIR 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 SOGECLAIR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lamar Advertising and SOGECLAIR.
Diversification Opportunities for Lamar Advertising and SOGECLAIR
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lamar and SOGECLAIR is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Lamar Advertising and SOGECLAIR SA INH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOGECLAIR SA INH 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 SOGECLAIR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOGECLAIR SA INH has no effect on the direction of Lamar Advertising i.e., Lamar Advertising and SOGECLAIR go up and down completely randomly.
Pair Corralation between Lamar Advertising and SOGECLAIR
Assuming the 90 days trading horizon Lamar Advertising is expected to generate 1.36 times less return on investment than SOGECLAIR. But when comparing it to its historical volatility, Lamar Advertising is 4.54 times less risky than SOGECLAIR. It trades about 0.21 of its potential returns per unit of risk. SOGECLAIR SA INH is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,720 in SOGECLAIR SA INH on October 31, 2024 and sell it today you would earn a total of 70.00 from holding SOGECLAIR SA INH or generate 4.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lamar Advertising vs. SOGECLAIR SA INH
Performance |
| Timeline |
| Lamar Advertising |
| SOGECLAIR SA INH |
Lamar Advertising and SOGECLAIR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lamar Advertising and SOGECLAIR
The main advantage of trading using opposite Lamar Advertising and SOGECLAIR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lamar Advertising position performs unexpectedly, SOGECLAIR 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 SOGECLAIR will offset losses from the drop in SOGECLAIR's long position.| Lamar Advertising vs. COSTCO WHOLESALE CDR | Lamar Advertising vs. RETAIL FOOD GROUP | Lamar Advertising vs. BURLINGTON STORES | Lamar Advertising vs. BJs Wholesale Club |
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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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