Correlation Between Adtalem Global and Lamar Advertising
Can any of the company-specific risk be diversified away by investing in both Adtalem Global 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 Adtalem Global and Lamar Advertising into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adtalem Global Education and Lamar Advertising, you can compare the effects of market volatilities on Adtalem Global 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 Adtalem Global with a short position of Lamar Advertising. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adtalem Global and Lamar Advertising.
Diversification Opportunities for Adtalem Global and Lamar Advertising
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Adtalem and Lamar is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Adtalem Global Education and Lamar Advertising in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lamar Advertising and Adtalem Global 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 Adtalem Global Education 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 Adtalem Global i.e., Adtalem Global and Lamar Advertising go up and down completely randomly.
Pair Corralation between Adtalem Global and Lamar Advertising
Assuming the 90 days trading horizon Adtalem Global Education is expected to generate 1.96 times more return on investment than Lamar Advertising. However, Adtalem Global is 1.96 times more volatile than Lamar Advertising. It trades about 0.4 of its potential returns per unit of risk. Lamar Advertising is currently generating about 0.05 per unit of risk. If you would invest 8,250 in Adtalem Global Education on October 20, 2024 and sell it today you would earn a total of 1,150 from holding Adtalem Global Education or generate 13.94% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Adtalem Global Education vs. Lamar Advertising
Performance |
Timeline |
Adtalem Global Education |
Lamar Advertising |
Adtalem Global and Lamar Advertising Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Adtalem Global and Lamar Advertising
The main advantage of trading using opposite Adtalem Global and Lamar Advertising positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adtalem Global 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.Adtalem Global vs. MidCap Financial Investment | Adtalem Global vs. Apollo Investment Corp | Adtalem Global vs. EPSILON HEALTHCARE LTD | Adtalem Global vs. SEI INVESTMENTS |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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