Correlation Between Cable One and Lumen Technologies
Can any of the company-specific risk be diversified away by investing in both Cable One 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 Cable One and Lumen Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cable One and Lumen Technologies, you can compare the effects of market volatilities on Cable One 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 Cable One with a short position of Lumen Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cable One and Lumen Technologies.
Diversification Opportunities for Cable One and Lumen Technologies
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cable and Lumen is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Cable One and Lumen Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lumen Technologies and Cable One 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 Cable One 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 Cable One i.e., Cable One and Lumen Technologies go up and down completely randomly.
Pair Corralation between Cable One and Lumen Technologies
Given the investment horizon of 90 days Cable One is expected to generate 0.66 times more return on investment than Lumen Technologies. However, Cable One is 1.52 times less risky than Lumen Technologies. It trades about -0.19 of its potential returns per unit of risk. Lumen Technologies is currently generating about -0.24 per unit of risk. If you would invest 39,397 in Cable One on November 18, 2024 and sell it today you would lose (9,897) from holding Cable One or give up 25.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cable One vs. Lumen Technologies
Performance |
| Timeline |
| Cable One |
| Lumen Technologies |
Cable One and Lumen Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cable One and Lumen Technologies
The main advantage of trading using opposite Cable One and Lumen Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cable One 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.| Cable One vs. Liberty Broadband Srs | Cable One vs. Liberty Broadband Corp | Cable One vs. Telkom Indonesia Tbk | Cable One vs. Liberty Global PLC |
| 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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