Correlation Between Lamar Advertising and Metro AG
Can any of the company-specific risk be diversified away by investing in both Lamar Advertising and Metro AG 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 Metro AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lamar Advertising and Metro AG, you can compare the effects of market volatilities on Lamar Advertising and Metro AG 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 Metro AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lamar Advertising and Metro AG.
Diversification Opportunities for Lamar Advertising and Metro AG
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lamar and Metro is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Lamar Advertising and Metro AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro AG 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 Metro AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metro AG has no effect on the direction of Lamar Advertising i.e., Lamar Advertising and Metro AG go up and down completely randomly.
Pair Corralation between Lamar Advertising and Metro AG
Assuming the 90 days trading horizon Lamar Advertising is expected to generate 8.25 times less return on investment than Metro AG. But when comparing it to its historical volatility, Lamar Advertising is 2.46 times less risky than Metro AG. It trades about 0.01 of its potential returns per unit of risk. Metro AG is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 505.00 in Metro AG on September 13, 2024 and sell it today you would earn a total of 5.00 from holding Metro AG or generate 0.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lamar Advertising vs. Metro AG
Performance |
| Timeline |
| Lamar Advertising |
| Metro AG |
Lamar Advertising and Metro AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lamar Advertising and Metro AG
The main advantage of trading using opposite Lamar Advertising and Metro AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lamar Advertising position performs unexpectedly, Metro AG 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 Metro AG will offset losses from the drop in Metro AG's long position.| Lamar Advertising vs. Apple Inc | Lamar Advertising vs. Apple Inc | Lamar Advertising vs. Apple Inc | Lamar Advertising vs. Apple Inc |
| Metro AG vs. Lamar Advertising | Metro AG vs. YATRA ONLINE DL 0001 | Metro AG vs. MUTUIONLINE | Metro AG vs. Salesforce |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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