Correlation Between Lamar Advertising and Seven West
Can any of the company-specific risk be diversified away by investing in both Lamar Advertising and Seven West 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 Seven West into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lamar Advertising and Seven West Media, you can compare the effects of market volatilities on Lamar Advertising and Seven West 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 Seven West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lamar Advertising and Seven West.
Diversification Opportunities for Lamar Advertising and Seven West
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lamar and Seven is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Lamar Advertising and Seven West Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seven West Media 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 Seven West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seven West Media has no effect on the direction of Lamar Advertising i.e., Lamar Advertising and Seven West go up and down completely randomly.
Pair Corralation between Lamar Advertising and Seven West
Assuming the 90 days trading horizon Lamar Advertising is expected to generate 0.22 times more return on investment than Seven West. However, Lamar Advertising is 4.45 times less risky than Seven West. It trades about -0.17 of its potential returns per unit of risk. Seven West Media is currently generating about -0.04 per unit of risk. If you would invest 12,474 in Lamar Advertising on September 26, 2024 and sell it today you would lose (674.00) from holding Lamar Advertising or give up 5.4% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Lamar Advertising vs. Seven West Media
Performance |
Timeline |
Lamar Advertising |
Seven West Media |
Lamar Advertising and Seven West Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lamar Advertising and Seven West
The main advantage of trading using opposite Lamar Advertising and Seven West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lamar Advertising position performs unexpectedly, Seven West 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 Seven West will offset losses from the drop in Seven West's long position.Lamar Advertising vs. Apple Inc | Lamar Advertising vs. Apple Inc | Lamar Advertising vs. Apple Inc | Lamar Advertising vs. Apple Inc |
Seven West vs. Live Nation Entertainment | Seven West vs. CTS Eventim AG | Seven West vs. Fuji Media Holdings | Seven West vs. Cinemark Holdings |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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