Correlation Between Dorman Products and Luminar Technologies
Can any of the company-specific risk be diversified away by investing in both Dorman Products and Luminar 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 Dorman Products and Luminar Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dorman Products and Luminar Technologies, you can compare the effects of market volatilities on Dorman Products and Luminar 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 Dorman Products with a short position of Luminar Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dorman Products and Luminar Technologies.
Diversification Opportunities for Dorman Products and Luminar Technologies
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dorman and Luminar is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Dorman Products and Luminar Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Luminar Technologies and Dorman Products 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 Dorman Products are associated (or correlated) with Luminar Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Luminar Technologies has no effect on the direction of Dorman Products i.e., Dorman Products and Luminar Technologies go up and down completely randomly.
Pair Corralation between Dorman Products and Luminar Technologies
Given the investment horizon of 90 days Dorman Products is expected to under-perform the Luminar Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Dorman Products is 7.04 times less risky than Luminar Technologies. The stock trades about -0.01 of its potential returns per unit of risk. The Luminar Technologies is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 549.00 in Luminar Technologies on October 20, 2024 and sell it today you would earn a total of 123.00 from holding Luminar Technologies or generate 22.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dorman Products vs. Luminar Technologies
Performance |
| Timeline |
| Dorman Products |
| Luminar Technologies |
Dorman Products and Luminar Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dorman Products and Luminar Technologies
The main advantage of trading using opposite Dorman Products and Luminar Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dorman Products position performs unexpectedly, Luminar 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 Luminar Technologies will offset losses from the drop in Luminar Technologies' long position.| Dorman Products vs. Standard Motor Products | Dorman Products vs. Motorcar Parts of | Dorman Products vs. Douglas Dynamics | Dorman Products vs. Stoneridge |
| Luminar Technologies vs. Mobileye Global Class | Luminar Technologies vs. Hyliion Holdings Corp | Luminar Technologies vs. Aeva Technologies | Luminar Technologies vs. Innoviz Technologies |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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