Correlation Between Lamar Advertising and NORTHEAST UTILITIES
Can any of the company-specific risk be diversified away by investing in both Lamar Advertising and NORTHEAST 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 NORTHEAST 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 NORTHEAST UTILITIES, you can compare the effects of market volatilities on Lamar Advertising and NORTHEAST 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 NORTHEAST UTILITIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lamar Advertising and NORTHEAST UTILITIES.
Diversification Opportunities for Lamar Advertising and NORTHEAST UTILITIES
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lamar and NORTHEAST is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Lamar Advertising and NORTHEAST UTILITIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NORTHEAST 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 NORTHEAST UTILITIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NORTHEAST UTILITIES has no effect on the direction of Lamar Advertising i.e., Lamar Advertising and NORTHEAST UTILITIES go up and down completely randomly.
Pair Corralation between Lamar Advertising and NORTHEAST UTILITIES
Assuming the 90 days trading horizon Lamar Advertising is not expected to generate positive returns. Moreover, Lamar Advertising is 1.1 times more volatile than NORTHEAST UTILITIES. It trades away all of its potential returns to assume current level of volatility. NORTHEAST UTILITIES is currently generating about -0.11 per unit of risk. If you would invest 11,876 in Lamar Advertising on September 29, 2024 and sell it today you would lose (76.00) from holding Lamar Advertising or give up 0.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lamar Advertising vs. NORTHEAST UTILITIES
Performance |
| Timeline |
| Lamar Advertising |
| NORTHEAST UTILITIES |
Lamar Advertising and NORTHEAST UTILITIES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lamar Advertising and NORTHEAST UTILITIES
The main advantage of trading using opposite Lamar Advertising and NORTHEAST UTILITIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lamar Advertising position performs unexpectedly, NORTHEAST 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 NORTHEAST UTILITIES will offset losses from the drop in NORTHEAST UTILITIES's long position.| Lamar Advertising vs. Apple Inc | Lamar Advertising vs. Apple Inc | Lamar Advertising vs. Apple Inc | Lamar Advertising vs. Apple Inc |
| NORTHEAST UTILITIES vs. OAKTRSPECLENDNEW | NORTHEAST UTILITIES vs. BANKINTER ADR 2007 | NORTHEAST UTILITIES vs. National Bank Holdings | NORTHEAST UTILITIES vs. TFS FINANCIAL |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes |