Correlation Between Lamar Advertising and LG Display
Can any of the company-specific risk be diversified away by investing in both Lamar Advertising and LG Display 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 LG Display into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lamar Advertising and LG Display Co, you can compare the effects of market volatilities on Lamar Advertising and LG Display 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 LG Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lamar Advertising and LG Display.
Diversification Opportunities for Lamar Advertising and LG Display
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lamar and LGA is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Lamar Advertising and LG Display Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Display 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 LG Display. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Display has no effect on the direction of Lamar Advertising i.e., Lamar Advertising and LG Display go up and down completely randomly.
Pair Corralation between Lamar Advertising and LG Display
Assuming the 90 days trading horizon Lamar Advertising is expected to generate 0.67 times more return on investment than LG Display. However, Lamar Advertising is 1.48 times less risky than LG Display. It trades about 0.15 of its potential returns per unit of risk. LG Display Co is currently generating about -0.08 per unit of risk. If you would invest 11,164 in Lamar Advertising on August 31, 2024 and sell it today you would earn a total of 1,436 from holding Lamar Advertising or generate 12.86% 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. LG Display Co
Performance |
| Timeline |
| Lamar Advertising |
| LG Display |
Lamar Advertising and LG Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lamar Advertising and LG Display
The main advantage of trading using opposite Lamar Advertising and LG Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lamar Advertising position performs unexpectedly, LG Display 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 LG Display will offset losses from the drop in LG Display's long position.| Lamar Advertising vs. Apple Inc | Lamar Advertising vs. Apple Inc | Lamar Advertising vs. Apple Inc | Lamar Advertising vs. Apple Inc |
| LG Display vs. SK TELECOM TDADR | LG Display vs. Rogers Communications | LG Display vs. Entravision Communications | LG Display vs. Singapore Telecommunications Limited |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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