Correlation Between Lamar Advertising and DEXUS

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

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

Diversification Opportunities for Lamar Advertising and DEXUS

0.04

Correlation Coefficient

Lamar Advertising  DEXUS

Significant diversification

The 3 months correlation between Lamar and DEXUS is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Lamar Advertising and DEXUS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DEXUS 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 DEXUS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DEXUS has no effect on the direction of Lamar Advertising i.e., Lamar Advertising and DEXUS go up and down completely randomly.

Pair Corralation between Lamar Advertising and DEXUS

Assuming the 90 days trading horizon Lamar Advertising is expected to under-perform the DEXUS. In addition to that, Lamar Advertising is 1.13 times more volatile than DEXUS. It trades about -0.22 of its total potential returns per unit of risk. DEXUS is currently generating about -0.14 per unit of volatility. If you would invest  421.00  in DEXUS on October 4, 2024 and sell it today you would lose (15.00) from holding DEXUS or give up 3.56% 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.  DEXUS

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.

DEXUS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DEXUS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady 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 DEXUS

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

The idea behind Lamar Advertising and DEXUS 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.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.