Correlation Between Lamar Advertising and HYATT HOTELS

Can any of the company-specific risk be diversified away by investing in both Lamar Advertising and HYATT HOTELS 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 Lamar Advertising and HYATT HOTELS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Lamar Advertising and HYATT HOTELS A, you can compare the effects of market volatilities on Lamar Advertising and HYATT HOTELS 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 Lamar Advertising with a short position of HYATT HOTELS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lamar Advertising and HYATT HOTELS.

Diversification Opportunities for Lamar Advertising and HYATT HOTELS

0.13

Correlation Coefficient

Lamar Advertising  HYATT HOTELS

Average diversification

The 3 months correlation between Lamar and HYATT is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Lamar Advertising and HYATT HOTELS A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HYATT HOTELS A and Lamar Advertising 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 Lamar Advertising are associated (or correlated) with HYATT HOTELS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HYATT HOTELS A has no effect on the direction of Lamar Advertising i.e., Lamar Advertising and HYATT HOTELS go up and down completely randomly.

Pair Corralation between Lamar Advertising and HYATT HOTELS

Assuming the 90 days trading horizon Lamar Advertising is expected to under-perform the HYATT HOTELS. But the stock apears to be less risky and, when comparing its historical volatility, Lamar Advertising is 1.38 times less risky than HYATT HOTELS. The stock trades about -0.3 of its potential returns per unit of risk. The HYATT HOTELS A is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  15,045  in HYATT HOTELS A on October 9, 2024 and sell it today you would lose (345.00) from holding HYATT HOTELS A or give up 2.29% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Lamar Advertising  vs.  HYATT HOTELS A

Lamar Advertising

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lamar Advertising has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Lamar Advertising is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

HYATT HOTELS A

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in HYATT HOTELS A are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, HYATT HOTELS may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Lamar Advertising and HYATT HOTELS

The main advantage of trading using opposite Lamar Advertising and HYATT HOTELS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lamar Advertising position performs unexpectedly, HYATT HOTELS 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 HYATT HOTELS will offset losses from the drop in HYATT HOTELS's long position.

The idea behind Lamar Advertising and HYATT HOTELS A pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.