Correlation Between Deutsche Telekom and Lumen Technologies
Can any of the company-specific risk be diversified away by investing in both Deutsche Telekom 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 Deutsche Telekom and Lumen Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Deutsche Telekom AG and Lumen Technologies, you can compare the effects of market volatilities on Deutsche Telekom 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 Deutsche Telekom with a short position of Lumen Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Telekom and Lumen Technologies.
Diversification Opportunities for Deutsche Telekom and Lumen Technologies
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Deutsche and Lumen is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Telekom AG and Lumen Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lumen Technologies and Deutsche Telekom 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 Deutsche Telekom AG 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 Deutsche Telekom i.e., Deutsche Telekom and Lumen Technologies go up and down completely randomly.
Pair Corralation between Deutsche Telekom and Lumen Technologies
Assuming the 90 days horizon Deutsche Telekom is expected to generate 4.63 times less return on investment than Lumen Technologies. But when comparing it to its historical volatility, Deutsche Telekom AG is 6.03 times less risky than Lumen Technologies. It trades about 0.05 of its potential returns per unit of risk. Lumen Technologies is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 551.00 in Lumen Technologies on August 23, 2024 and sell it today you would earn a total of 234.00 from holding Lumen Technologies or generate 42.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 32.06% |
| Values | Daily Returns |
Deutsche Telekom AG vs. Lumen Technologies
Performance |
| Timeline |
| Deutsche Telekom |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Lumen Technologies |
Deutsche Telekom and Lumen Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deutsche Telekom and Lumen Technologies
The main advantage of trading using opposite Deutsche Telekom and Lumen Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deutsche Telekom 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.| Deutsche Telekom vs. KDDI Corp PK | Deutsche Telekom vs. Nippon Telegraph Telephone | Deutsche Telekom vs. Softbank Group Corp | Deutsche Telekom vs. KT Corporation |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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