Correlation Between American Assets and Lamar Advertising
Can any of the company-specific risk be diversified away by investing in both American Assets and Lamar Advertising 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 American Assets and Lamar Advertising into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Assets Trust and Lamar Advertising, you can compare the effects of market volatilities on American Assets and Lamar Advertising 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 American Assets with a short position of Lamar Advertising. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Assets and Lamar Advertising.
Diversification Opportunities for American Assets and Lamar Advertising
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Lamar is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding American Assets Trust and Lamar Advertising in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lamar Advertising and American Assets 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 American Assets Trust are associated (or correlated) with Lamar Advertising. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lamar Advertising has no effect on the direction of American Assets i.e., American Assets and Lamar Advertising go up and down completely randomly.
Pair Corralation between American Assets and Lamar Advertising
Considering the 90-day investment horizon American Assets Trust is expected to under-perform the Lamar Advertising. In addition to that, American Assets is 1.69 times more volatile than Lamar Advertising. It trades about -0.06 of its total potential returns per unit of risk. Lamar Advertising is currently generating about 0.13 per unit of volatility. If you would invest 12,229 in Lamar Advertising on October 20, 2024 and sell it today you would earn a total of 296.00 from holding Lamar Advertising or generate 2.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Assets Trust vs. Lamar Advertising
Performance |
| Timeline |
| American Assets Trust |
| Lamar Advertising |
American Assets and Lamar Advertising Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Assets and Lamar Advertising
The main advantage of trading using opposite American Assets and Lamar Advertising positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Assets position performs unexpectedly, Lamar Advertising 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 Lamar Advertising will offset losses from the drop in Lamar Advertising's long position.| American Assets vs. Essential Properties Realty | American Assets vs. Armada Hflr Pr | American Assets vs. CTO Realty Growth | American Assets vs. Brightspire Capital |
| Lamar Advertising vs. Rayonier | Lamar Advertising vs. Gaming Leisure Properties | Lamar Advertising vs. EPR Properties | Lamar Advertising vs. AFC Gamma |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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