Correlation Between Metro AG and Lamar Advertising
Can any of the company-specific risk be diversified away by investing in both Metro AG 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 Metro AG and Lamar Advertising into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metro AG and Lamar Advertising, you can compare the effects of market volatilities on Metro AG 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 Metro AG with a short position of Lamar Advertising. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metro AG and Lamar Advertising.
Diversification Opportunities for Metro AG and Lamar Advertising
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Metro and Lamar is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Metro AG and Lamar Advertising in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lamar Advertising and Metro AG 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 Metro AG 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 Metro AG i.e., Metro AG and Lamar Advertising go up and down completely randomly.
Pair Corralation between Metro AG and Lamar Advertising
Assuming the 90 days trading horizon Metro AG is expected to under-perform the Lamar Advertising. In addition to that, Metro AG is 1.93 times more volatile than Lamar Advertising. It trades about -0.01 of its total potential returns per unit of risk. Lamar Advertising is currently generating about 0.06 per unit of volatility. If you would invest 7,926 in Lamar Advertising on September 13, 2024 and sell it today you would earn a total of 4,374 from holding Lamar Advertising or generate 55.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metro AG vs. Lamar Advertising
Performance |
| Timeline |
| Metro AG |
| Lamar Advertising |
Metro AG and Lamar Advertising Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metro AG and Lamar Advertising
The main advantage of trading using opposite Metro AG and Lamar Advertising positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metro AG 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.| Metro AG vs. Lamar Advertising | Metro AG vs. YATRA ONLINE DL 0001 | Metro AG vs. MUTUIONLINE | Metro AG vs. Salesforce |
| Lamar Advertising vs. Apple Inc | Lamar Advertising vs. Apple Inc | Lamar Advertising vs. Apple Inc | Lamar Advertising vs. Apple Inc |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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