Correlation Between Lamar Advertising and Benchmark Electronics
Can any of the company-specific risk be diversified away by investing in both Lamar Advertising and Benchmark Electronics 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 Benchmark Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lamar Advertising and Benchmark Electronics, you can compare the effects of market volatilities on Lamar Advertising and Benchmark Electronics 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 Benchmark Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lamar Advertising and Benchmark Electronics.
Diversification Opportunities for Lamar Advertising and Benchmark Electronics
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lamar and Benchmark is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Lamar Advertising and Benchmark Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Benchmark Electronics 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 Benchmark Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Benchmark Electronics has no effect on the direction of Lamar Advertising i.e., Lamar Advertising and Benchmark Electronics go up and down completely randomly.
Pair Corralation between Lamar Advertising and Benchmark Electronics
Assuming the 90 days trading horizon Lamar Advertising is expected to generate 0.46 times more return on investment than Benchmark Electronics. However, Lamar Advertising is 2.16 times less risky than Benchmark Electronics. It trades about 0.16 of its potential returns per unit of risk. Benchmark Electronics is currently generating about -0.05 per unit of risk. If you would invest 11,700 in Lamar Advertising on November 3, 2024 and sell it today you would earn a total of 400.00 from holding Lamar Advertising or generate 3.42% 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. Benchmark Electronics
Performance |
| Timeline |
| Lamar Advertising |
| Benchmark Electronics |
Lamar Advertising and Benchmark Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lamar Advertising and Benchmark Electronics
The main advantage of trading using opposite Lamar Advertising and Benchmark Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lamar Advertising position performs unexpectedly, Benchmark Electronics 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 Benchmark Electronics will offset losses from the drop in Benchmark Electronics' long position.| Lamar Advertising vs. SIDETRADE EO 1 | Lamar Advertising vs. MARKET VECTR RETAIL | Lamar Advertising vs. The Trade Desk | Lamar Advertising vs. Harmony Gold Mining |
| Benchmark Electronics vs. Indutrade AB | Benchmark Electronics vs. SOEDER SPORTFISKE AB | Benchmark Electronics vs. Yuexiu Transport Infrastructure | Benchmark Electronics vs. FLOW TRADERS LTD |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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