Correlation Between ScanSource and Lamar Advertising
Can any of the company-specific risk be diversified away by investing in both ScanSource 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 ScanSource and Lamar Advertising into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ScanSource and Lamar Advertising, you can compare the effects of market volatilities on ScanSource 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 ScanSource with a short position of Lamar Advertising. Check out your portfolio center. Please also check ongoing floating volatility patterns of ScanSource and Lamar Advertising.
Diversification Opportunities for ScanSource and Lamar Advertising
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ScanSource and Lamar is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding ScanSource and Lamar Advertising in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lamar Advertising and ScanSource 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 ScanSource 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 ScanSource i.e., ScanSource and Lamar Advertising go up and down completely randomly.
Pair Corralation between ScanSource and Lamar Advertising
Assuming the 90 days horizon ScanSource is expected to generate 1.47 times more return on investment than Lamar Advertising. However, ScanSource is 1.47 times more volatile than Lamar Advertising. It trades about 0.15 of its potential returns per unit of risk. Lamar Advertising is currently generating about 0.12 per unit of risk. If you would invest 2,880 in ScanSource on April 25, 2025 and sell it today you would earn a total of 540.00 from holding ScanSource or generate 18.75% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
ScanSource vs. Lamar Advertising
Performance |
Timeline |
ScanSource |
Lamar Advertising |
ScanSource and Lamar Advertising Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with ScanSource and Lamar Advertising
The main advantage of trading using opposite ScanSource and Lamar Advertising positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ScanSource 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.ScanSource vs. VIENNA INSURANCE GR | ScanSource vs. INSURANCE AUST GRP | ScanSource vs. The Hanover Insurance | ScanSource vs. Goosehead Insurance |
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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 CEOs Directory module to screen CEOs from public companies around the world.
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