Correlation Between Lamar Advertising and ETFS Coffee
Can any of the company-specific risk be diversified away by investing in both Lamar Advertising and ETFS Coffee 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 ETFS Coffee into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lamar Advertising and ETFS Coffee ETC, you can compare the effects of market volatilities on Lamar Advertising and ETFS Coffee 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 ETFS Coffee. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lamar Advertising and ETFS Coffee.
Diversification Opportunities for Lamar Advertising and ETFS Coffee
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Lamar and ETFS is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Lamar Advertising and ETFS Coffee ETC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETFS Coffee ETC 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 ETFS Coffee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETFS Coffee ETC has no effect on the direction of Lamar Advertising i.e., Lamar Advertising and ETFS Coffee go up and down completely randomly.
Pair Corralation between Lamar Advertising and ETFS Coffee
Assuming the 90 days trading horizon Lamar Advertising is expected to under-perform the ETFS Coffee. But the stock apears to be less risky and, when comparing its historical volatility, Lamar Advertising is 2.18 times less risky than ETFS Coffee. The stock trades about -0.14 of its potential returns per unit of risk. The ETFS Coffee ETC is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 4,766 in ETFS Coffee ETC on September 22, 2024 and sell it today you would earn a total of 618.00 from holding ETFS Coffee ETC or generate 12.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Lamar Advertising vs. ETFS Coffee ETC
Performance |
| Timeline |
| Lamar Advertising |
| ETFS Coffee ETC |
Lamar Advertising and ETFS Coffee Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lamar Advertising and ETFS Coffee
The main advantage of trading using opposite Lamar Advertising and ETFS Coffee positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lamar Advertising position performs unexpectedly, ETFS Coffee 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 ETFS Coffee will offset losses from the drop in ETFS Coffee's long position.| Lamar Advertising vs. ACCSYS TECHPLC EO | Lamar Advertising vs. Amkor Technology | Lamar Advertising vs. NetSol Technologies | Lamar Advertising vs. ORMAT TECHNOLOGIES |
| ETFS Coffee vs. Apple Inc | ETFS Coffee vs. Apple Inc | ETFS Coffee vs. Apple Inc | ETFS Coffee vs. Apple Inc |
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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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