Correlation Between Access Power and Lumen Technologies
Can any of the company-specific risk be diversified away by investing in both Access Power and Lumen Technologies 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 Access Power and Lumen Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Access Power Co and Lumen Technologies, you can compare the effects of market volatilities on Access Power and Lumen Technologies 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 Access Power with a short position of Lumen Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Access Power and Lumen Technologies.
Diversification Opportunities for Access Power and Lumen Technologies
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Access and Lumen is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Access Power Co and Lumen Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lumen Technologies and Access Power 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 Access Power Co are associated (or correlated) with Lumen Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lumen Technologies has no effect on the direction of Access Power i.e., Access Power and Lumen Technologies go up and down completely randomly.
Pair Corralation between Access Power and Lumen Technologies
Given the investment horizon of 90 days Access Power Co is expected to generate 5.53 times more return on investment than Lumen Technologies. However, Access Power is 5.53 times more volatile than Lumen Technologies. It trades about 0.08 of its potential returns per unit of risk. Lumen Technologies is currently generating about 0.19 per unit of risk. If you would invest 0.12 in Access Power Co on August 27, 2024 and sell it today you would lose (0.04) from holding Access Power Co or give up 33.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Access Power Co vs. Lumen Technologies
Performance |
| Timeline |
| Access Power |
| Lumen Technologies |
Access Power and Lumen Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Access Power and Lumen Technologies
The main advantage of trading using opposite Access Power and Lumen Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Access Power position performs unexpectedly, Lumen Technologies 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 Lumen Technologies will offset losses from the drop in Lumen Technologies' long position.| Access Power vs. BCE Inc | Access Power vs. Axiologix | Access Power vs. Advanced Info Service | Access Power vs. American Nortel Communications |
| Lumen Technologies vs. Verizon Communications | Lumen Technologies vs. T Mobile | Lumen Technologies vs. Comcast Corp | Lumen Technologies vs. ATT Inc |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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