Correlation Between Lamar Advertising and Brockhaus Capital
Can any of the company-specific risk be diversified away by investing in both Lamar Advertising and Brockhaus Capital 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 Brockhaus Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lamar Advertising and Brockhaus Capital Management, you can compare the effects of market volatilities on Lamar Advertising and Brockhaus Capital 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 Brockhaus Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lamar Advertising and Brockhaus Capital.
Diversification Opportunities for Lamar Advertising and Brockhaus Capital
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lamar and Brockhaus is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Lamar Advertising and Brockhaus Capital Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brockhaus Capital 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 Brockhaus Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brockhaus Capital has no effect on the direction of Lamar Advertising i.e., Lamar Advertising and Brockhaus Capital go up and down completely randomly.
Pair Corralation between Lamar Advertising and Brockhaus Capital
Assuming the 90 days trading horizon Lamar Advertising is expected to generate 0.56 times more return on investment than Brockhaus Capital. However, Lamar Advertising is 1.79 times less risky than Brockhaus Capital. It trades about 0.16 of its potential returns per unit of risk. Brockhaus Capital Management is currently generating about -0.15 per unit of risk. If you would invest 10,966 in Lamar Advertising on September 5, 2024 and sell it today you would earn a total of 1,534 from holding Lamar Advertising or generate 13.99% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 98.46% |
Values | Daily Returns |
Lamar Advertising vs. Brockhaus Capital Management
Performance |
Timeline |
Lamar Advertising |
Brockhaus Capital |
Lamar Advertising and Brockhaus Capital Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lamar Advertising and Brockhaus Capital
The main advantage of trading using opposite Lamar Advertising and Brockhaus Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lamar Advertising position performs unexpectedly, Brockhaus Capital 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 Brockhaus Capital will offset losses from the drop in Brockhaus Capital's long position.Lamar Advertising vs. Apple Inc | Lamar Advertising vs. Apple Inc | Lamar Advertising vs. Apple Inc | Lamar Advertising vs. Apple Inc |
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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