Correlation Between Lamar Advertising and SPARTAN STORES
Can any of the company-specific risk be diversified away by investing in both Lamar Advertising and SPARTAN STORES 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 SPARTAN STORES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lamar Advertising and SPARTAN STORES, you can compare the effects of market volatilities on Lamar Advertising and SPARTAN STORES 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 SPARTAN STORES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lamar Advertising and SPARTAN STORES.
Diversification Opportunities for Lamar Advertising and SPARTAN STORES
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lamar and SPARTAN is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Lamar Advertising and SPARTAN STORES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPARTAN STORES 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 SPARTAN STORES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPARTAN STORES has no effect on the direction of Lamar Advertising i.e., Lamar Advertising and SPARTAN STORES go up and down completely randomly.
Pair Corralation between Lamar Advertising and SPARTAN STORES
Assuming the 90 days trading horizon Lamar Advertising is expected to generate 0.86 times more return on investment than SPARTAN STORES. However, Lamar Advertising is 1.17 times less risky than SPARTAN STORES. It trades about 0.09 of its potential returns per unit of risk. SPARTAN STORES is currently generating about 0.0 per unit of risk. If you would invest 7,944 in Lamar Advertising on August 31, 2024 and sell it today you would earn a total of 4,656 from holding Lamar Advertising or generate 58.61% 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. SPARTAN STORES
Performance |
| Timeline |
| Lamar Advertising |
| SPARTAN STORES |
Lamar Advertising and SPARTAN STORES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lamar Advertising and SPARTAN STORES
The main advantage of trading using opposite Lamar Advertising and SPARTAN STORES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lamar Advertising position performs unexpectedly, SPARTAN STORES 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 SPARTAN STORES will offset losses from the drop in SPARTAN STORES's long position.| Lamar Advertising vs. Apple Inc | Lamar Advertising vs. Apple Inc | Lamar Advertising vs. Apple Inc | Lamar Advertising vs. Apple Inc |
| SPARTAN STORES vs. SIVERS SEMICONDUCTORS AB | SPARTAN STORES vs. Darden Restaurants | SPARTAN STORES vs. Reliance Steel Aluminum | SPARTAN STORES vs. Q2M Managementberatung AG |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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