Correlation Between United Utilities and Lamar Advertising
Can any of the company-specific risk be diversified away by investing in both United Utilities 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 United Utilities and Lamar Advertising into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Utilities Group and Lamar Advertising, you can compare the effects of market volatilities on United Utilities 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 United Utilities with a short position of Lamar Advertising. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Utilities and Lamar Advertising.
Diversification Opportunities for United Utilities and Lamar Advertising
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between United and Lamar is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding United Utilities Group and Lamar Advertising in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lamar Advertising and United Utilities 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 United Utilities Group 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 United Utilities i.e., United Utilities and Lamar Advertising go up and down completely randomly.
Pair Corralation between United Utilities and Lamar Advertising
If you would invest 1,244 in United Utilities Group on September 29, 2024 and sell it today you would earn a total of 16.00 from holding United Utilities Group or generate 1.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Utilities Group vs. Lamar Advertising
Performance |
| Timeline |
| United Utilities |
| Lamar Advertising |
United Utilities and Lamar Advertising Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Utilities and Lamar Advertising
The main advantage of trading using opposite United Utilities and Lamar Advertising positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Utilities 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.| United Utilities vs. Samsung Electronics Co | United Utilities vs. CarsalesCom | United Utilities vs. Electronic Arts | United Utilities vs. Lendlease Group |
| 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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