Correlation Between Lamar Advertising and MOBILE FACTORY

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

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

Diversification Opportunities for Lamar Advertising and MOBILE FACTORY

-0.18

Correlation Coefficient

Lamar Advertising  MOBILE FACTORY

Good diversification

The 3 months correlation between Lamar and MOBILE is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Lamar Advertising and MOBILE FACTORY INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MOBILE FACTORY INC 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 MOBILE FACTORY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MOBILE FACTORY INC has no effect on the direction of Lamar Advertising i.e., Lamar Advertising and MOBILE FACTORY go up and down completely randomly.

Pair Corralation between Lamar Advertising and MOBILE FACTORY

Assuming the 90 days trading horizon Lamar Advertising is expected to generate 0.59 times more return on investment than MOBILE FACTORY. However, Lamar Advertising is 1.7 times less risky than MOBILE FACTORY. It trades about 0.22 of its potential returns per unit of risk. MOBILE FACTORY INC is currently generating about 0.04 per unit of risk. If you would invest  11,800  in Lamar Advertising on October 26, 2024 and sell it today you would earn a total of  400.00  from holding Lamar Advertising or generate 3.39% return on investment over 90 days.

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

Lamar Advertising  vs.  MOBILE FACTORY INC

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 comparatively stable basic indicators, Lamar Advertising is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

MOBILE FACTORY INC

Risk-Adjusted Performance

5 of 100

Modest

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

Pair Trading with Lamar Advertising and MOBILE FACTORY

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

The idea behind Lamar Advertising and MOBILE FACTORY INC 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.