Correlation Between Covivio SA and Lamar Advertising

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

Diversification Opportunities for Covivio SA and Lamar Advertising

-0.23
  Correlation Coefficient

Very good diversification

The 3 months correlation between Covivio and Lamar is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Covivio SA and Lamar Advertising in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lamar Advertising and Covivio SA 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 Covivio SA 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 Covivio SA i.e., Covivio SA and Lamar Advertising go up and down completely randomly.

Pair Corralation between Covivio SA and Lamar Advertising

Assuming the 90 days horizon Covivio SA is expected to under-perform the Lamar Advertising. In addition to that, Covivio SA is 1.4 times more volatile than Lamar Advertising. It trades about -0.17 of its total potential returns per unit of risk. Lamar Advertising is currently generating about -0.18 per unit of volatility. If you would invest  12,175  in Lamar Advertising on September 22, 2024 and sell it today you would lose (475.00) from holding Lamar Advertising or give up 3.9% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Covivio SA  vs.  Lamar Advertising

 Performance 
       Timeline  
Covivio SA 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Covivio SA 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 basic 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

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Lamar Advertising has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Lamar Advertising is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Covivio SA and Lamar Advertising Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Covivio SA and Lamar Advertising

The main advantage of trading using opposite Covivio SA and Lamar Advertising positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Covivio SA 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 Covivio SA 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.

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