Correlation Between Lamar Advertising and Sanoma Oyj
Can any of the company-specific risk be diversified away by investing in both Lamar Advertising and Sanoma Oyj 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 Sanoma Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lamar Advertising and Sanoma Oyj, you can compare the effects of market volatilities on Lamar Advertising and Sanoma Oyj 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 Sanoma Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lamar Advertising and Sanoma Oyj.
Diversification Opportunities for Lamar Advertising and Sanoma Oyj
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Lamar and Sanoma is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Lamar Advertising and Sanoma Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanoma Oyj 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 Sanoma Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sanoma Oyj has no effect on the direction of Lamar Advertising i.e., Lamar Advertising and Sanoma Oyj go up and down completely randomly.
Pair Corralation between Lamar Advertising and Sanoma Oyj
Assuming the 90 days trading horizon Lamar Advertising is expected to generate 2.09 times less return on investment than Sanoma Oyj. But when comparing it to its historical volatility, Lamar Advertising is 1.94 times less risky than Sanoma Oyj. It trades about 0.08 of its potential returns per unit of risk. Sanoma Oyj is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 722.00 in Sanoma Oyj on September 14, 2024 and sell it today you would earn a total of 24.00 from holding Sanoma Oyj or generate 3.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lamar Advertising vs. Sanoma Oyj
Performance |
| Timeline |
| Lamar Advertising |
| Sanoma Oyj |
Lamar Advertising and Sanoma Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lamar Advertising and Sanoma Oyj
The main advantage of trading using opposite Lamar Advertising and Sanoma Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lamar Advertising position performs unexpectedly, Sanoma Oyj 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 Sanoma Oyj will offset losses from the drop in Sanoma Oyj's long position.| Lamar Advertising vs. Microbot Medical | Lamar Advertising vs. BII Railway Transportation | Lamar Advertising vs. SAFETY MEDICAL PROD | Lamar Advertising vs. CVR Medical Corp |
| Sanoma Oyj vs. Coor Service Management | Sanoma Oyj vs. United Utilities Group | Sanoma Oyj vs. VIRGIN WINES UK | Sanoma Oyj vs. Guidewire Software |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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