Correlation Between Lamar Advertising and United Parcel
Can any of the company-specific risk be diversified away by investing in both Lamar Advertising and United Parcel 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 United Parcel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lamar Advertising and United Parcel Service, you can compare the effects of market volatilities on Lamar Advertising and United Parcel 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 United Parcel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lamar Advertising and United Parcel.
Diversification Opportunities for Lamar Advertising and United Parcel
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lamar and United is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Lamar Advertising and United Parcel Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Parcel Service 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 United Parcel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Parcel Service has no effect on the direction of Lamar Advertising i.e., Lamar Advertising and United Parcel go up and down completely randomly.
Pair Corralation between Lamar Advertising and United Parcel
Assuming the 90 days trading horizon Lamar Advertising is expected to generate 1.48 times less return on investment than United Parcel. In addition to that, Lamar Advertising is 1.46 times more volatile than United Parcel Service. It trades about 0.09 of its total potential returns per unit of risk. United Parcel Service is currently generating about 0.2 per unit of volatility. If you would invest 12,159 in United Parcel Service on September 1, 2024 and sell it today you would earn a total of 667.00 from holding United Parcel Service or generate 5.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Lamar Advertising vs. United Parcel Service
Performance |
| Timeline |
| Lamar Advertising |
| United Parcel Service |
Lamar Advertising and United Parcel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lamar Advertising and United Parcel
The main advantage of trading using opposite Lamar Advertising and United Parcel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lamar Advertising position performs unexpectedly, United Parcel 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 United Parcel will offset losses from the drop in United Parcel's long position.| Lamar Advertising vs. Apple Inc | Lamar Advertising vs. Apple Inc | Lamar Advertising vs. Apple Inc | Lamar Advertising vs. Apple Inc |
| United Parcel vs. ZTO Express | United Parcel vs. Superior Plus Corp | United Parcel vs. Origin Agritech | United Parcel vs. Identiv |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm |