Correlation Between Lamar Advertising and Gladstone Commercial

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

By analyzing existing cross correlation between Lamar Advertising and Gladstone Commercial, you can compare the effects of market volatilities on Lamar Advertising and Gladstone Commercial 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 Gladstone Commercial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lamar Advertising and Gladstone Commercial.

Diversification Opportunities for Lamar Advertising and Gladstone Commercial

0.84

Correlation Coefficient

Lamar Advertising  Gladstone Commercial

Very poor diversification

The 3 months correlation between Lamar and Gladstone is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Lamar Advertising and Gladstone Commercial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gladstone Commercial 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 Gladstone Commercial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gladstone Commercial has no effect on the direction of Lamar Advertising i.e., Lamar Advertising and Gladstone Commercial go up and down completely randomly.

Pair Corralation between Lamar Advertising and Gladstone Commercial

If you would invest (100.00) in Gladstone Commercial on December 30, 2024 and sell it today you would earn a total of  100.00  from holding Gladstone Commercial or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	0.0%
Values	Daily Returns

Lamar Advertising  vs.  Gladstone Commercial

Lamar Advertising

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lamar Advertising has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Gladstone Commercial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gladstone Commercial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Lamar Advertising and Gladstone Commercial

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

The idea behind Lamar Advertising and Gladstone Commercial 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.