Correlation Between Lamar Advertising and Canadian Utilities
Can any of the company-specific risk be diversified away by investing in both Lamar Advertising and Canadian Utilities 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 Canadian Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lamar Advertising and Canadian Utilities Limited, you can compare the effects of market volatilities on Lamar Advertising and Canadian Utilities 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 Canadian Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lamar Advertising and Canadian Utilities.
Diversification Opportunities for Lamar Advertising and Canadian Utilities
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lamar and Canadian is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Lamar Advertising and Canadian Utilities Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Utilities 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 Canadian Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian Utilities has no effect on the direction of Lamar Advertising i.e., Lamar Advertising and Canadian Utilities go up and down completely randomly.
Pair Corralation between Lamar Advertising and Canadian Utilities
Assuming the 90 days trading horizon Lamar Advertising is expected to generate 1.36 times more return on investment than Canadian Utilities. However, Lamar Advertising is 1.36 times more volatile than Canadian Utilities Limited. It trades about 0.06 of its potential returns per unit of risk. Canadian Utilities Limited is currently generating about 0.02 per unit of risk. If you would invest 8,182 in Lamar Advertising on September 3, 2024 and sell it today you would earn a total of 4,418 from holding Lamar Advertising or generate 54.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lamar Advertising vs. Canadian Utilities Limited
Performance |
| Timeline |
| Lamar Advertising |
| Canadian Utilities |
Lamar Advertising and Canadian Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lamar Advertising and Canadian Utilities
The main advantage of trading using opposite Lamar Advertising and Canadian Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lamar Advertising position performs unexpectedly, Canadian Utilities 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 Canadian Utilities will offset losses from the drop in Canadian Utilities' 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 |
| Canadian Utilities vs. MAVEN WIRELESS SWEDEN | Canadian Utilities vs. Citic Telecom International | Canadian Utilities vs. Tower One Wireless | Canadian Utilities vs. Chunghwa Telecom Co |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
Other Complementary Tools
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm |