Correlation Between Pentair Plc and Lamar Advertising
Can any of the company-specific risk be diversified away by investing in both Pentair Plc 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 Pentair Plc and Lamar Advertising into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pentair plc and Lamar Advertising, you can compare the effects of market volatilities on Pentair Plc 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 Pentair Plc with a short position of Lamar Advertising. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pentair Plc and Lamar Advertising.
Diversification Opportunities for Pentair Plc and Lamar Advertising
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Pentair and Lamar is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Pentair plc and Lamar Advertising in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lamar Advertising and Pentair Plc 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 Pentair plc 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 Pentair Plc i.e., Pentair Plc and Lamar Advertising go up and down completely randomly.
Pair Corralation between Pentair Plc and Lamar Advertising
Assuming the 90 days horizon Pentair plc is expected to under-perform the Lamar Advertising. In addition to that, Pentair Plc is 1.01 times more volatile than Lamar Advertising. It trades about -0.25 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 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 |
Pentair plc vs. Lamar Advertising
Performance |
| Timeline |
| Pentair plc |
| Lamar Advertising |
Pentair Plc and Lamar Advertising Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pentair Plc and Lamar Advertising
The main advantage of trading using opposite Pentair Plc and Lamar Advertising positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pentair Plc 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.| Pentair Plc vs. Cars Inc | Pentair Plc vs. Hemisphere Energy Corp | Pentair Plc vs. Computershare Limited | Pentair Plc vs. CARSALESCOM |
| 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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