Correlation Between JAPAN AIRLINES and Lamar Advertising
Can any of the company-specific risk be diversified away by investing in both JAPAN AIRLINES 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 JAPAN AIRLINES and Lamar Advertising into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JAPAN AIRLINES and Lamar Advertising, you can compare the effects of market volatilities on JAPAN AIRLINES 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 JAPAN AIRLINES with a short position of Lamar Advertising. Check out your portfolio center. Please also check ongoing floating volatility patterns of JAPAN AIRLINES and Lamar Advertising.
Diversification Opportunities for JAPAN AIRLINES and Lamar Advertising
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between JAPAN and Lamar is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding JAPAN AIRLINES and Lamar Advertising in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lamar Advertising and JAPAN AIRLINES 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 JAPAN AIRLINES 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 JAPAN AIRLINES i.e., JAPAN AIRLINES and Lamar Advertising go up and down completely randomly.
Pair Corralation between JAPAN AIRLINES and Lamar Advertising
Assuming the 90 days trading horizon JAPAN AIRLINES is expected to under-perform the Lamar Advertising. But the stock apears to be less risky and, when comparing its historical volatility, JAPAN AIRLINES is 1.63 times less risky than Lamar Advertising. The stock trades about -0.41 of its potential returns per unit of risk. The Lamar Advertising is currently generating about -0.17 of returns per unit of risk over similar time horizon. If you would invest 12,175 in Lamar Advertising on October 11, 2024 and sell it today you would lose (575.00) from holding Lamar Advertising or give up 4.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
JAPAN AIRLINES vs. Lamar Advertising
Performance |
| Timeline |
| JAPAN AIRLINES |
| Lamar Advertising |
JAPAN AIRLINES and Lamar Advertising Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JAPAN AIRLINES and Lamar Advertising
The main advantage of trading using opposite JAPAN AIRLINES and Lamar Advertising positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JAPAN AIRLINES 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.| JAPAN AIRLINES vs. National Beverage Corp | JAPAN AIRLINES vs. INDOFOOD AGRI RES | JAPAN AIRLINES vs. GRIFFIN MINING LTD | JAPAN AIRLINES vs. VIVA WINE GROUP |
| Lamar Advertising vs. Wizz Air Holdings | Lamar Advertising vs. Pentair plc | Lamar Advertising vs. SOUTHWEST AIRLINES | Lamar Advertising vs. JAPAN AIRLINES |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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