Correlation Between Lamar Advertising and Teva Pharmaceutical
Can any of the company-specific risk be diversified away by investing in both Lamar Advertising and Teva Pharmaceutical 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 Teva Pharmaceutical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lamar Advertising and Teva Pharmaceutical Industries, you can compare the effects of market volatilities on Lamar Advertising and Teva Pharmaceutical 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 Teva Pharmaceutical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lamar Advertising and Teva Pharmaceutical.
Diversification Opportunities for Lamar Advertising and Teva Pharmaceutical
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lamar and Teva is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Lamar Advertising and Teva Pharmaceutical Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teva Pharmaceutical 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 Teva Pharmaceutical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teva Pharmaceutical has no effect on the direction of Lamar Advertising i.e., Lamar Advertising and Teva Pharmaceutical go up and down completely randomly.
Pair Corralation between Lamar Advertising and Teva Pharmaceutical
Assuming the 90 days trading horizon Lamar Advertising is expected to generate 0.29 times more return on investment than Teva Pharmaceutical. However, Lamar Advertising is 3.51 times less risky than Teva Pharmaceutical. It trades about 0.16 of its potential returns per unit of risk. Teva Pharmaceutical Industries is currently generating about -0.15 per unit of risk. If you would invest 11,700 in Lamar Advertising on November 6, 2024 and sell it today you would earn a total of 400.00 from holding Lamar Advertising or generate 3.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lamar Advertising vs. Teva Pharmaceutical Industries
Performance |
| Timeline |
| Lamar Advertising |
| Teva Pharmaceutical |
Lamar Advertising and Teva Pharmaceutical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lamar Advertising and Teva Pharmaceutical
The main advantage of trading using opposite Lamar Advertising and Teva Pharmaceutical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lamar Advertising position performs unexpectedly, Teva Pharmaceutical 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 Teva Pharmaceutical will offset losses from the drop in Teva Pharmaceutical's long position.| Lamar Advertising vs. SIVERS SEMICONDUCTORS AB | Lamar Advertising vs. NorAm Drilling AS | Lamar Advertising vs. Volkswagen AG | Lamar Advertising vs. Darden Restaurants |
| Teva Pharmaceutical vs. Telecom Argentina SA | Teva Pharmaceutical vs. Perseus Mining Limited | Teva Pharmaceutical vs. FIREWEED METALS P | Teva Pharmaceutical vs. Mitsui Chemicals |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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