Correlation Between Lamar Advertising and NAKED WINES
Can any of the company-specific risk be diversified away by investing in both Lamar Advertising and NAKED WINES 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 NAKED WINES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lamar Advertising and NAKED WINES PLC, you can compare the effects of market volatilities on Lamar Advertising and NAKED WINES 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 NAKED WINES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lamar Advertising and NAKED WINES.
Diversification Opportunities for Lamar Advertising and NAKED WINES
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lamar and NAKED is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Lamar Advertising and NAKED WINES PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NAKED WINES PLC 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 NAKED WINES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NAKED WINES PLC has no effect on the direction of Lamar Advertising i.e., Lamar Advertising and NAKED WINES go up and down completely randomly.
Pair Corralation between Lamar Advertising and NAKED WINES
Assuming the 90 days trading horizon Lamar Advertising is expected to generate 2.77 times less return on investment than NAKED WINES. But when comparing it to its historical volatility, Lamar Advertising is 4.75 times less risky than NAKED WINES. It trades about 0.16 of its potential returns per unit of risk. NAKED WINES PLC is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 53.00 in NAKED WINES PLC on November 3, 2024 and sell it today you would earn a total of 4.00 from holding NAKED WINES PLC or generate 7.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lamar Advertising vs. NAKED WINES PLC
Performance |
| Timeline |
| Lamar Advertising |
| NAKED WINES PLC |
Lamar Advertising and NAKED WINES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lamar Advertising and NAKED WINES
The main advantage of trading using opposite Lamar Advertising and NAKED WINES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lamar Advertising position performs unexpectedly, NAKED WINES 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 NAKED WINES will offset losses from the drop in NAKED WINES's 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 |
| NAKED WINES vs. Heidelberg Materials AG | NAKED WINES vs. THRACE PLASTICS | NAKED WINES vs. Summit Materials | NAKED WINES vs. Sumitomo Rubber Industries |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
Other Complementary Tools
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets |