Correlation Between Lamar Advertising and Vulcan Materials
Can any of the company-specific risk be diversified away by investing in both Lamar Advertising and Vulcan Materials 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 Vulcan Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lamar Advertising and Vulcan Materials, you can compare the effects of market volatilities on Lamar Advertising and Vulcan Materials 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 Vulcan Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lamar Advertising and Vulcan Materials.
Diversification Opportunities for Lamar Advertising and Vulcan Materials
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Lamar and Vulcan is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Lamar Advertising and Vulcan Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vulcan Materials 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 Vulcan Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vulcan Materials has no effect on the direction of Lamar Advertising i.e., Lamar Advertising and Vulcan Materials go up and down completely randomly.
Pair Corralation between Lamar Advertising and Vulcan Materials
Assuming the 90 days trading horizon Lamar Advertising is expected to under-perform the Vulcan Materials. In addition to that, Lamar Advertising is 1.05 times more volatile than Vulcan Materials. It trades about -0.22 of its total potential returns per unit of risk. Vulcan Materials is currently generating about -0.05 per unit of volatility. If you would invest 26,200 in Vulcan Materials on October 17, 2024 and sell it today you would lose (400.00) from holding Vulcan Materials or give up 1.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lamar Advertising vs. Vulcan Materials
Performance |
| Timeline |
| Lamar Advertising |
| Vulcan Materials |
Lamar Advertising and Vulcan Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lamar Advertising and Vulcan Materials
The main advantage of trading using opposite Lamar Advertising and Vulcan Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lamar Advertising position performs unexpectedly, Vulcan Materials 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 Vulcan Materials will offset losses from the drop in Vulcan Materials' long position.| Lamar Advertising vs. Wyndham Hotels Resorts | Lamar Advertising vs. COVIVIO HOTELS INH | Lamar Advertising vs. EBRO FOODS | Lamar Advertising vs. Lifeway Foods |
| Vulcan Materials vs. Pembina Pipeline Corp | Vulcan Materials vs. Clean Energy Fuels | Vulcan Materials vs. Canon Marketing Japan | Vulcan Materials vs. Indutrade AB |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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