Correlation Between Lamar Advertising and MEDICAL FACILITIES
Can any of the company-specific risk be diversified away by investing in both Lamar Advertising and MEDICAL FACILITIES 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 MEDICAL FACILITIES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lamar Advertising and MEDICAL FACILITIES NEW, you can compare the effects of market volatilities on Lamar Advertising and MEDICAL FACILITIES 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 MEDICAL FACILITIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lamar Advertising and MEDICAL FACILITIES.
Diversification Opportunities for Lamar Advertising and MEDICAL FACILITIES
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Lamar and MEDICAL is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Lamar Advertising and MEDICAL FACILITIES NEW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MEDICAL FACILITIES NEW 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 MEDICAL FACILITIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MEDICAL FACILITIES NEW has no effect on the direction of Lamar Advertising i.e., Lamar Advertising and MEDICAL FACILITIES go up and down completely randomly.
Pair Corralation between Lamar Advertising and MEDICAL FACILITIES
Assuming the 90 days trading horizon Lamar Advertising is expected to under-perform the MEDICAL FACILITIES. But the stock apears to be less risky and, when comparing its historical volatility, Lamar Advertising is 1.34 times less risky than MEDICAL FACILITIES. The stock trades about -0.17 of its potential returns per unit of risk. The MEDICAL FACILITIES NEW is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 1,070 in MEDICAL FACILITIES NEW on September 25, 2024 and sell it today you would lose (30.00) from holding MEDICAL FACILITIES NEW or give up 2.8% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Lamar Advertising vs. MEDICAL FACILITIES NEW
Performance |
Timeline |
Lamar Advertising |
MEDICAL FACILITIES NEW |
Lamar Advertising and MEDICAL FACILITIES Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lamar Advertising and MEDICAL FACILITIES
The main advantage of trading using opposite Lamar Advertising and MEDICAL FACILITIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lamar Advertising position performs unexpectedly, MEDICAL FACILITIES 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 MEDICAL FACILITIES will offset losses from the drop in MEDICAL FACILITIES's long position.Lamar Advertising vs. Fukuyama Transporting Co | Lamar Advertising vs. Gaztransport Technigaz SA | Lamar Advertising vs. Eidesvik Offshore ASA | Lamar Advertising vs. Yuexiu Transport Infrastructure |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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