Correlation Between Charter Communications and Lumen Technologies
Can any of the company-specific risk be diversified away by investing in both Charter Communications 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 Charter Communications and Lumen Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Charter Communications and Lumen Technologies, you can compare the effects of market volatilities on Charter Communications 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 Charter Communications with a short position of Lumen Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charter Communications and Lumen Technologies.
Diversification Opportunities for Charter Communications and Lumen Technologies
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Charter and Lumen is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Charter Communications and Lumen Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lumen Technologies and Charter Communications 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 Charter Communications 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 Charter Communications i.e., Charter Communications and Lumen Technologies go up and down completely randomly.
Pair Corralation between Charter Communications and Lumen Technologies
Given the investment horizon of 90 days Charter Communications is expected to generate 0.59 times more return on investment than Lumen Technologies. However, Charter Communications is 1.69 times less risky than Lumen Technologies. It trades about -0.04 of its potential returns per unit of risk. Lumen Technologies is currently generating about -0.24 per unit of risk. If you would invest 38,502 in Charter Communications on November 18, 2024 and sell it today you would lose (2,475) from holding Charter Communications or give up 6.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Charter Communications vs. Lumen Technologies
Performance |
| Timeline |
| Charter Communications |
| Lumen Technologies |
Charter Communications and Lumen Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charter Communications and Lumen Technologies
The main advantage of trading using opposite Charter Communications and Lumen Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charter Communications 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.| Charter Communications vs. T Mobile | Charter Communications vs. Verizon Communications | Charter Communications vs. ATT Inc | Charter Communications vs. Liberty Broadband Srs |
| 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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