Correlation Between Lamar Advertising and Salesforce
Can any of the company-specific risk be diversified away by investing in both Lamar Advertising and Salesforce 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 Salesforce into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lamar Advertising and Salesforce, you can compare the effects of market volatilities on Lamar Advertising and Salesforce 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 Salesforce. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lamar Advertising and Salesforce.
Diversification Opportunities for Lamar Advertising and Salesforce
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Lamar and Salesforce is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Lamar Advertising and Salesforce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salesforce 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 Salesforce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salesforce has no effect on the direction of Lamar Advertising i.e., Lamar Advertising and Salesforce go up and down completely randomly.
Pair Corralation between Lamar Advertising and Salesforce
Assuming the 90 days trading horizon Lamar Advertising is expected to generate 1.09 times less return on investment than Salesforce. But when comparing it to its historical volatility, Lamar Advertising is 1.84 times less risky than Salesforce. It trades about 0.09 of its potential returns per unit of risk. Salesforce is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 26,580 in Salesforce on November 3, 2024 and sell it today you would earn a total of 6,865 from holding Salesforce or generate 25.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lamar Advertising vs. Salesforce
Performance |
| Timeline |
| Lamar Advertising |
| Salesforce |
Lamar Advertising and Salesforce Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lamar Advertising and Salesforce
The main advantage of trading using opposite Lamar Advertising and Salesforce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lamar Advertising position performs unexpectedly, Salesforce 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 Salesforce will offset losses from the drop in Salesforce's long position.| Lamar Advertising vs. HOCHSCHILD MINING | Lamar Advertising vs. Media and Games | Lamar Advertising vs. Scientific Games | Lamar Advertising vs. DETALION GAMES SA |
| Salesforce vs. COVIVIO HOTELS INH | Salesforce vs. Pebblebrook Hotel Trust | Salesforce vs. DALATA HOTEL | Salesforce vs. Xinhua Winshare Publishing |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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