Correlation Between Lumen Technologies and Southwest Airlines
Can any of the company-specific risk be diversified away by investing in both Lumen Technologies and Southwest Airlines 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 Lumen Technologies and Southwest Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lumen Technologies and Southwest Airlines Co, you can compare the effects of market volatilities on Lumen Technologies and Southwest Airlines 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 Lumen Technologies with a short position of Southwest Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lumen Technologies and Southwest Airlines.
Diversification Opportunities for Lumen Technologies and Southwest Airlines
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Lumen and Southwest is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Lumen Technologies and Southwest Airlines Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southwest Airlines and Lumen Technologies 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 Lumen Technologies are associated (or correlated) with Southwest Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southwest Airlines has no effect on the direction of Lumen Technologies i.e., Lumen Technologies and Southwest Airlines go up and down completely randomly.
Pair Corralation between Lumen Technologies and Southwest Airlines
Assuming the 90 days trading horizon Lumen Technologies is expected to generate 3.29 times more return on investment than Southwest Airlines. However, Lumen Technologies is 3.29 times more volatile than Southwest Airlines Co. It trades about 0.1 of its potential returns per unit of risk. Southwest Airlines Co is currently generating about 0.06 per unit of risk. If you would invest 139.00 in Lumen Technologies on September 14, 2024 and sell it today you would earn a total of 511.00 from holding Lumen Technologies or generate 367.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 97.82% |
| Values | Daily Returns |
Lumen Technologies vs. Southwest Airlines Co
Performance |
| Timeline |
| Lumen Technologies |
| Southwest Airlines |
Lumen Technologies and Southwest Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lumen Technologies and Southwest Airlines
The main advantage of trading using opposite Lumen Technologies and Southwest Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lumen Technologies position performs unexpectedly, Southwest Airlines 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 Southwest Airlines will offset losses from the drop in Southwest Airlines' long position.| Lumen Technologies vs. Lloyds Banking Group | Lumen Technologies vs. St Galler Kantonalbank | Lumen Technologies vs. Cincinnati Financial Corp | Lumen Technologies vs. Synchrony Financial |
| Southwest Airlines vs. Wizz Air Holdings | Southwest Airlines vs. Bankers Investment Trust | Southwest Airlines vs. Smithson Investment Trust | Southwest Airlines vs. Lowland Investment Co |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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