Correlation Between Mitsubishi Gas and Lamar Advertising
Can any of the company-specific risk be diversified away by investing in both Mitsubishi Gas 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 Mitsubishi Gas and Lamar Advertising into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mitsubishi Gas Chemical and Lamar Advertising, you can compare the effects of market volatilities on Mitsubishi Gas 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 Mitsubishi Gas with a short position of Lamar Advertising. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitsubishi Gas and Lamar Advertising.
Diversification Opportunities for Mitsubishi Gas and Lamar Advertising
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Mitsubishi and Lamar is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Mitsubishi Gas Chemical and Lamar Advertising in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lamar Advertising and Mitsubishi Gas 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 Mitsubishi Gas Chemical 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 Mitsubishi Gas i.e., Mitsubishi Gas and Lamar Advertising go up and down completely randomly.
Pair Corralation between Mitsubishi Gas and Lamar Advertising
Assuming the 90 days trading horizon Mitsubishi Gas is expected to generate 1.54 times less return on investment than Lamar Advertising. In addition to that, Mitsubishi Gas is 1.08 times more volatile than Lamar Advertising. It trades about 0.1 of its total potential returns per unit of risk. Lamar Advertising is currently generating about 0.17 per unit of volatility. If you would invest 10,966 in Lamar Advertising on August 29, 2024 and sell it today you would earn a total of 1,634 from holding Lamar Advertising or generate 14.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mitsubishi Gas Chemical vs. Lamar Advertising
Performance |
| Timeline |
| Mitsubishi Gas Chemical |
| Lamar Advertising |
Mitsubishi Gas and Lamar Advertising Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mitsubishi Gas and Lamar Advertising
The main advantage of trading using opposite Mitsubishi Gas and Lamar Advertising positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mitsubishi Gas 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.| Mitsubishi Gas vs. Apple Inc | Mitsubishi Gas vs. Apple Inc | Mitsubishi Gas vs. Apple Inc | Mitsubishi Gas vs. Apple Inc |
| 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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