Correlation Between Lamar Advertising and Canadian National
Can any of the company-specific risk be diversified away by investing in both Lamar Advertising and Canadian National 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 National 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 National Railway, you can compare the effects of market volatilities on Lamar Advertising and Canadian National 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 National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lamar Advertising and Canadian National.
Diversification Opportunities for Lamar Advertising and Canadian National
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lamar and Canadian is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Lamar Advertising and Canadian National Railway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian National Railway 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 National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian National Railway has no effect on the direction of Lamar Advertising i.e., Lamar Advertising and Canadian National go up and down completely randomly.
Pair Corralation between Lamar Advertising and Canadian National
Assuming the 90 days trading horizon Lamar Advertising is expected to generate 0.79 times more return on investment than Canadian National. However, Lamar Advertising is 1.27 times less risky than Canadian National. It trades about 0.12 of its potential returns per unit of risk. Canadian National Railway is currently generating about -0.06 per unit of risk. If you would invest 11,700 in Lamar Advertising on November 7, 2024 and sell it today you would earn a total of 300.00 from holding Lamar Advertising or generate 2.56% 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 National Railway
Performance |
| Timeline |
| Lamar Advertising |
| Canadian National Railway |
Lamar Advertising and Canadian National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lamar Advertising and Canadian National
The main advantage of trading using opposite Lamar Advertising and Canadian National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lamar Advertising position performs unexpectedly, Canadian National 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 National will offset losses from the drop in Canadian National's long position.| Lamar Advertising vs. SIVERS SEMICONDUCTORS AB | Lamar Advertising vs. NorAm Drilling AS | Lamar Advertising vs. Volkswagen AG | Lamar Advertising vs. Darden Restaurants |
| Canadian National vs. DFS Furniture PLC | Canadian National vs. Haier Smart Home | Canadian National vs. Regal Hotels International | Canadian National vs. Sunstone Hotel Investors |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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