Correlation Between Outfront Media and Lamar Advertising
Can any of the company-specific risk be diversified away by investing in both Outfront Media 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 Outfront Media and Lamar Advertising into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Outfront Media and Lamar Advertising, you can compare the effects of market volatilities on Outfront Media 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 Outfront Media with a short position of Lamar Advertising. Check out your portfolio center. Please also check ongoing floating volatility patterns of Outfront Media and Lamar Advertising.
Diversification Opportunities for Outfront Media and Lamar Advertising
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Outfront and Lamar is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Outfront Media and Lamar Advertising in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lamar Advertising and Outfront 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 Outfront Media 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 Outfront Media i.e., Outfront Media and Lamar Advertising go up and down completely randomly.
Pair Corralation between Outfront Media and Lamar Advertising
Considering the 90-day investment horizon Outfront Media is expected to generate 1.03 times more return on investment than Lamar Advertising. However, Outfront Media is 1.03 times more volatile than Lamar Advertising. It trades about 0.27 of its potential returns per unit of risk. Lamar Advertising is currently generating about -0.11 per unit of risk. If you would invest 1,772 in Outfront Media on August 27, 2024 and sell it today you would earn a total of 141.00 from holding Outfront Media or generate 7.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Outfront Media vs. Lamar Advertising
Performance |
| Timeline |
| Outfront Media |
| Lamar Advertising |
Outfront Media and Lamar Advertising Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Outfront Media and Lamar Advertising
The main advantage of trading using opposite Outfront Media and Lamar Advertising positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Outfront Media 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.| Outfront Media vs. PotlatchDeltic Corp | Outfront Media vs. Gaming Leisure Properties | Outfront Media vs. Rayonier | Outfront Media vs. Weyerhaeuser |
| Lamar Advertising vs. Broadstone Net Lease | Lamar Advertising vs. Armada Hflr Pr | Lamar Advertising vs. Brightspire Capital | Lamar Advertising vs. Safehold |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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