Correlation Between Lamar Advertising and AVITA Medical
Can any of the company-specific risk be diversified away by investing in both Lamar Advertising and AVITA Medical 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 AVITA Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lamar Advertising and AVITA Medical, you can compare the effects of market volatilities on Lamar Advertising and AVITA Medical 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 AVITA Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lamar Advertising and AVITA Medical.
Diversification Opportunities for Lamar Advertising and AVITA Medical
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lamar and AVITA is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Lamar Advertising and AVITA Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AVITA Medical 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 AVITA Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AVITA Medical has no effect on the direction of Lamar Advertising i.e., Lamar Advertising and AVITA Medical go up and down completely randomly.
Pair Corralation between Lamar Advertising and AVITA Medical
Assuming the 90 days trading horizon Lamar Advertising is expected to generate 0.19 times more return on investment than AVITA Medical. However, Lamar Advertising is 5.14 times less risky than AVITA Medical. It trades about -0.23 of its potential returns per unit of risk. AVITA Medical is currently generating about -0.18 per unit of risk. If you would invest 12,275 in Lamar Advertising on October 13, 2024 and sell it today you would lose (775.00) from holding Lamar Advertising or give up 6.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.44% |
| Values | Daily Returns |
Lamar Advertising vs. AVITA Medical
Performance |
| Timeline |
| Lamar Advertising |
| AVITA Medical |
Lamar Advertising and AVITA Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lamar Advertising and AVITA Medical
The main advantage of trading using opposite Lamar Advertising and AVITA Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lamar Advertising position performs unexpectedly, AVITA Medical 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 AVITA Medical will offset losses from the drop in AVITA Medical's long position.| Lamar Advertising vs. Waste Management | Lamar Advertising vs. Penn National Gaming | Lamar Advertising vs. GAMESTOP | Lamar Advertising vs. Cleanaway Waste Management |
| AVITA Medical vs. Citic Telecom International | AVITA Medical vs. CITIC Telecom International | AVITA Medical vs. BURLINGTON STORES | AVITA Medical vs. Retail Estates NV |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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