Correlation Between Lamar Advertising and Archer Daniels
Can any of the company-specific risk be diversified away by investing in both Lamar Advertising and Archer Daniels 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 Archer Daniels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lamar Advertising and Archer Daniels Midland, you can compare the effects of market volatilities on Lamar Advertising and Archer Daniels 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 Archer Daniels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lamar Advertising and Archer Daniels.
Diversification Opportunities for Lamar Advertising and Archer Daniels
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lamar and Archer is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Lamar Advertising and Archer Daniels Midland in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Archer Daniels Midland 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 Archer Daniels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Archer Daniels Midland has no effect on the direction of Lamar Advertising i.e., Lamar Advertising and Archer Daniels go up and down completely randomly.
Pair Corralation between Lamar Advertising and Archer Daniels
Assuming the 90 days trading horizon Lamar Advertising is expected to generate 0.87 times more return on investment than Archer Daniels. However, Lamar Advertising is 1.15 times less risky than Archer Daniels. It trades about 0.12 of its potential returns per unit of risk. Archer Daniels Midland is currently generating about 0.08 per unit of risk. If you would invest 12,100 in Lamar Advertising on September 3, 2024 and sell it today you would earn a total of 500.00 from holding Lamar Advertising or generate 4.13% 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. Archer Daniels Midland
Performance |
| Timeline |
| Lamar Advertising |
| Archer Daniels Midland |
Lamar Advertising and Archer Daniels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lamar Advertising and Archer Daniels
The main advantage of trading using opposite Lamar Advertising and Archer Daniels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lamar Advertising position performs unexpectedly, Archer Daniels 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 Archer Daniels will offset losses from the drop in Archer Daniels' long position.| Lamar Advertising vs. CITY OFFICE REIT | Lamar Advertising vs. Infrastrutture Wireless Italiane | Lamar Advertising vs. CENTURIA OFFICE REIT | Lamar Advertising vs. Transportadora de Gas |
| Archer Daniels vs. Salesforce | Archer Daniels vs. Lamar Advertising | Archer Daniels vs. Chuangs China Investments | Archer Daniels vs. BOS BETTER ONLINE |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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