Correlation Between Brockhaus Capital and Lamar Advertising

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Can any of the company-specific risk be diversified away by investing in both Brockhaus Capital and Lamar Advertising 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 Brockhaus Capital and Lamar Advertising into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brockhaus Capital Management and Lamar Advertising, you can compare the effects of market volatilities on Brockhaus Capital and Lamar Advertising 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 Brockhaus Capital with a short position of Lamar Advertising. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brockhaus Capital and Lamar Advertising.

Diversification Opportunities for Brockhaus Capital and Lamar Advertising

-0.44
  Correlation Coefficient

Very good diversification

The 3 months correlation between Brockhaus and Lamar is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Brockhaus Capital Management and Lamar Advertising in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lamar Advertising and Brockhaus Capital 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 Brockhaus Capital Management are associated (or correlated) with Lamar Advertising. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lamar Advertising has no effect on the direction of Brockhaus Capital i.e., Brockhaus Capital and Lamar Advertising go up and down completely randomly.

Pair Corralation between Brockhaus Capital and Lamar Advertising

Assuming the 90 days trading horizon Brockhaus Capital Management is expected to under-perform the Lamar Advertising. In addition to that, Brockhaus Capital is 1.79 times more volatile than Lamar Advertising. It trades about -0.13 of its total potential returns per unit of risk. Lamar Advertising is currently generating about 0.14 per unit of volatility. If you would invest  11,065  in Lamar Advertising on September 11, 2024 and sell it today you would earn a total of  1,335  from holding Lamar Advertising or generate 12.07% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Brockhaus Capital Management  vs.  Lamar Advertising

 Performance 
       Timeline  
Brockhaus Capital 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Brockhaus Capital Management has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.
Lamar Advertising 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Lamar Advertising are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Lamar Advertising may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Brockhaus Capital and Lamar Advertising Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Brockhaus Capital and Lamar Advertising

The main advantage of trading using opposite Brockhaus Capital and Lamar Advertising positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brockhaus Capital position performs unexpectedly, Lamar Advertising 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 Lamar Advertising will offset losses from the drop in Lamar Advertising's long position.
The idea behind Brockhaus Capital Management and Lamar Advertising 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.

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