Correlation Between Lamar Advertising and PennyMac Mortgage
Can any of the company-specific risk be diversified away by investing in both Lamar Advertising and PennyMac Mortgage 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 PennyMac Mortgage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lamar Advertising and PennyMac Mortgage Investment, you can compare the effects of market volatilities on Lamar Advertising and PennyMac Mortgage 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 PennyMac Mortgage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lamar Advertising and PennyMac Mortgage.
Diversification Opportunities for Lamar Advertising and PennyMac Mortgage
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lamar and PennyMac is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Lamar Advertising and PennyMac Mortgage Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennyMac Mortgage 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 PennyMac Mortgage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PennyMac Mortgage has no effect on the direction of Lamar Advertising i.e., Lamar Advertising and PennyMac Mortgage go up and down completely randomly.
Pair Corralation between Lamar Advertising and PennyMac Mortgage
Assuming the 90 days horizon Lamar Advertising is expected to generate 0.55 times more return on investment than PennyMac Mortgage. However, Lamar Advertising is 1.81 times less risky than PennyMac Mortgage. It trades about 0.01 of its potential returns per unit of risk. PennyMac Mortgage Investment is currently generating about -0.16 per unit of risk. If you would invest 10,700 in Lamar Advertising on March 7, 2024 and sell it today you would earn a total of 0.00 from holding Lamar Advertising or generate 0.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Lamar Advertising vs. PennyMac Mortgage Investment
Performance |
Timeline |
Lamar Advertising |
PennyMac Mortgage |
Lamar Advertising and PennyMac Mortgage Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lamar Advertising and PennyMac Mortgage
The main advantage of trading using opposite Lamar Advertising and PennyMac Mortgage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lamar Advertising position performs unexpectedly, PennyMac Mortgage 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 PennyMac Mortgage will offset losses from the drop in PennyMac Mortgage's long position.Lamar Advertising vs. GPT Group | Lamar Advertising vs. CITIUS RESOURCES LS 005 | Lamar Advertising vs. NMI Holdings | Lamar Advertising vs. SIVERS SEMICONDUCTORS AB |
PennyMac Mortgage vs. GPT Group | PennyMac Mortgage vs. CITIUS RESOURCES LS 005 | PennyMac Mortgage vs. NMI Holdings | PennyMac Mortgage vs. SIVERS SEMICONDUCTORS AB |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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