Correlation Between Lamar Advertising and EPR Properties

Can any of the company-specific risk be diversified away by investing in both Lamar Advertising and EPR Properties 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 EPR Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Lamar Advertising and EPR Properties, you can compare the effects of market volatilities on Lamar Advertising and EPR Properties 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 EPR Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lamar Advertising and EPR Properties.

Diversification Opportunities for Lamar Advertising and EPR Properties

-0.23

Correlation Coefficient

Lamar Advertising  EPR Properties

Very good diversification

The 3 months correlation between Lamar and EPR is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Lamar Advertising and EPR Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EPR Properties 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 EPR Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EPR Properties has no effect on the direction of Lamar Advertising i.e., Lamar Advertising and EPR Properties go up and down completely randomly.

Pair Corralation between Lamar Advertising and EPR Properties

Given the investment horizon of 90 days Lamar Advertising is expected to under-perform the EPR Properties. In addition to that, Lamar Advertising is 1.46 times more volatile than EPR Properties. It trades about -0.08 of its total potential returns per unit of risk. EPR Properties is currently generating about 0.25 per unit of volatility. If you would invest  4,287  in EPR Properties on December 23, 2024 and sell it today you would earn a total of  852.00  from holding EPR Properties or generate 19.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Lamar Advertising  vs.  EPR Properties

Lamar Advertising

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lamar Advertising has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unfluctuating performance, the Stock's primary indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

EPR Properties

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in EPR Properties are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, EPR Properties reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lamar Advertising and EPR Properties

The main advantage of trading using opposite Lamar Advertising and EPR Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lamar Advertising position performs unexpectedly, EPR Properties 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 EPR Properties will offset losses from the drop in EPR Properties' long position.

The idea behind Lamar Advertising and EPR Properties 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.