Correlation Between Lamar Advertising and AIR PRODCHEMICALS
Can any of the company-specific risk be diversified away by investing in both Lamar Advertising and AIR PRODCHEMICALS 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 AIR PRODCHEMICALS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lamar Advertising and AIR PRODCHEMICALS, you can compare the effects of market volatilities on Lamar Advertising and AIR PRODCHEMICALS 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 AIR PRODCHEMICALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lamar Advertising and AIR PRODCHEMICALS.
Diversification Opportunities for Lamar Advertising and AIR PRODCHEMICALS
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lamar and AIR is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Lamar Advertising and AIR PRODCHEMICALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIR PRODCHEMICALS 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 AIR PRODCHEMICALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIR PRODCHEMICALS has no effect on the direction of Lamar Advertising i.e., Lamar Advertising and AIR PRODCHEMICALS go up and down completely randomly.
Pair Corralation between Lamar Advertising and AIR PRODCHEMICALS
Assuming the 90 days trading horizon Lamar Advertising is expected to generate 0.92 times more return on investment than AIR PRODCHEMICALS. However, Lamar Advertising is 1.08 times less risky than AIR PRODCHEMICALS. It trades about 0.09 of its potential returns per unit of risk. AIR PRODCHEMICALS is currently generating about 0.04 per unit of risk. If you would invest 7,944 in Lamar Advertising on August 31, 2024 and sell it today you would earn a total of 4,656 from holding Lamar Advertising or generate 58.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.74% |
| Values | Daily Returns |
Lamar Advertising vs. AIR PRODCHEMICALS
Performance |
| Timeline |
| Lamar Advertising |
| AIR PRODCHEMICALS |
Lamar Advertising and AIR PRODCHEMICALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lamar Advertising and AIR PRODCHEMICALS
The main advantage of trading using opposite Lamar Advertising and AIR PRODCHEMICALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lamar Advertising position performs unexpectedly, AIR PRODCHEMICALS 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 AIR PRODCHEMICALS will offset losses from the drop in AIR PRODCHEMICALS's long position.| Lamar Advertising vs. Apple Inc | Lamar Advertising vs. Apple Inc | Lamar Advertising vs. Apple Inc | Lamar Advertising vs. Apple Inc |
| AIR PRODCHEMICALS vs. CapitaLand Investment Limited | AIR PRODCHEMICALS vs. SEI INVESTMENTS | AIR PRODCHEMICALS vs. AUSTEVOLL SEAFOOD | AIR PRODCHEMICALS vs. Gladstone Investment |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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