Correlation Between General Mills and Lamar Advertising
Can any of the company-specific risk be diversified away by investing in both General Mills 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 General Mills and Lamar Advertising into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Mills and Lamar Advertising, you can compare the effects of market volatilities on General Mills 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 General Mills with a short position of Lamar Advertising. Check out your portfolio center. Please also check ongoing floating volatility patterns of General Mills and Lamar Advertising.
Diversification Opportunities for General Mills and Lamar Advertising
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between General and Lamar is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding General Mills and Lamar Advertising in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lamar Advertising and General Mills 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 General Mills 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 General Mills i.e., General Mills and Lamar Advertising go up and down completely randomly.
Pair Corralation between General Mills and Lamar Advertising
Assuming the 90 days horizon General Mills is expected to generate 3.07 times less return on investment than Lamar Advertising. But when comparing it to its historical volatility, General Mills is 1.06 times less risky than Lamar Advertising. It trades about 0.02 of its potential returns per unit of risk. Lamar Advertising is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 7,949 in Lamar Advertising on August 29, 2024 and sell it today you would earn a total of 4,651 from holding Lamar Advertising or generate 58.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Mills vs. Lamar Advertising
Performance |
| Timeline |
| General Mills |
| Lamar Advertising |
General Mills and Lamar Advertising Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with General Mills and Lamar Advertising
The main advantage of trading using opposite General Mills and Lamar Advertising positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Mills 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.| General Mills vs. United States Steel | General Mills vs. NTG Nordic Transport | General Mills vs. LEGACY IRON ORE | General Mills vs. USWE SPORTS AB |
| Lamar Advertising vs. Superior Plus Corp | Lamar Advertising vs. NMI Holdings | Lamar Advertising vs. SIVERS SEMICONDUCTORS AB | Lamar Advertising vs. Talanx AG |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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