Correlation Between Sims Metal and Lamar Advertising
Can any of the company-specific risk be diversified away by investing in both Sims Metal 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 Sims Metal and Lamar Advertising into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sims Metal Management and Lamar Advertising, you can compare the effects of market volatilities on Sims Metal 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 Sims Metal with a short position of Lamar Advertising. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sims Metal and Lamar Advertising.
Diversification Opportunities for Sims Metal and Lamar Advertising
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sims and Lamar is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Sims Metal Management and Lamar Advertising in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lamar Advertising and Sims Metal 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 Sims Metal Management 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 Sims Metal i.e., Sims Metal and Lamar Advertising go up and down completely randomly.
Pair Corralation between Sims Metal and Lamar Advertising
Assuming the 90 days horizon Sims Metal is expected to generate 9.99 times less return on investment than Lamar Advertising. In addition to that, Sims Metal is 1.3 times more volatile than Lamar Advertising. It trades about 0.0 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 8,108 in Lamar Advertising on August 31, 2024 and sell it today you would earn a total of 4,492 from holding Lamar Advertising or generate 55.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sims Metal Management vs. Lamar Advertising
Performance |
| Timeline |
| Sims Metal Management |
| Lamar Advertising |
Sims Metal and Lamar Advertising Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sims Metal and Lamar Advertising
The main advantage of trading using opposite Sims Metal and Lamar Advertising positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sims Metal 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.| Sims Metal vs. SALESFORCE INC CDR | Sims Metal vs. CARSALESCOM | Sims Metal vs. ADRIATIC METALS LS 013355 | Sims Metal vs. AAC TECHNOLOGHLDGADR |
| 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
Other Complementary Tools
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges |