Correlation Between One Media and LBG Media
Can any of the company-specific risk be diversified away by investing in both One Media and LBG Media 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 One Media and LBG Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between One Media iP and LBG Media PLC, you can compare the effects of market volatilities on One Media and LBG Media 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 One Media with a short position of LBG Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of One Media and LBG Media.
Diversification Opportunities for One Media and LBG Media
Average diversification
The 3 months correlation between One and LBG is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding One Media iP and LBG Media PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LBG Media PLC and One Media 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 One Media iP are associated (or correlated) with LBG Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LBG Media PLC has no effect on the direction of One Media i.e., One Media and LBG Media go up and down completely randomly.
Pair Corralation between One Media and LBG Media
Assuming the 90 days trading horizon One Media iP is expected to under-perform the LBG Media. But the stock apears to be less risky and, when comparing its historical volatility, One Media iP is 1.04 times less risky than LBG Media. The stock trades about -0.03 of its potential returns per unit of risk. The LBG Media PLC is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 6,950 in LBG Media PLC on August 24, 2024 and sell it today you would earn a total of 6,150 from holding LBG Media PLC or generate 88.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
One Media iP vs. LBG Media PLC
Performance |
| Timeline |
| One Media iP |
| LBG Media PLC |
One Media and LBG Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with One Media and LBG Media
The main advantage of trading using opposite One Media and LBG Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if One Media position performs unexpectedly, LBG Media 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 LBG Media will offset losses from the drop in LBG Media's long position.| One Media vs. Schweiter Technologies AG | One Media vs. Made Tech Group | One Media vs. Gaztransport et Technigaz | One Media vs. Jacquet Metal Service |
| LBG Media vs. Take Two Interactive Software | LBG Media vs. Polar Capital Technology | LBG Media vs. Spotify Technology SA | LBG Media vs. Sunny Optical Technology |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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