Correlation Between Empire Metals and Lumen Technologies
Can any of the company-specific risk be diversified away by investing in both Empire Metals 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 Empire Metals and Lumen Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Empire Metals Limited and Lumen Technologies, you can compare the effects of market volatilities on Empire Metals 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 Empire Metals with a short position of Lumen Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empire Metals and Lumen Technologies.
Diversification Opportunities for Empire Metals and Lumen Technologies
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Empire and Lumen is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Empire Metals Limited and Lumen Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lumen Technologies and Empire Metals 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 Empire Metals Limited 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 Empire Metals i.e., Empire Metals and Lumen Technologies go up and down completely randomly.
Pair Corralation between Empire Metals and Lumen Technologies
Assuming the 90 days trading horizon Empire Metals is expected to generate 4.7 times less return on investment than Lumen Technologies. But when comparing it to its historical volatility, Empire Metals Limited is 1.59 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 0.1 of returns per unit of risk over similar time horizon. If you would invest 139.00 in Lumen Technologies on September 14, 2024 and sell it today you would earn a total of 511.00 from holding Lumen Technologies or generate 367.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.55% |
| Values | Daily Returns |
Empire Metals Limited vs. Lumen Technologies
Performance |
| Timeline |
| Empire Metals Limited |
| Lumen Technologies |
Empire Metals and Lumen Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Empire Metals and Lumen Technologies
The main advantage of trading using opposite Empire Metals and Lumen Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empire Metals 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.| Empire Metals vs. Givaudan SA | Empire Metals vs. Antofagasta PLC | Empire Metals vs. Ferrexpo PLC | Empire Metals vs. Atalaya Mining |
| Lumen Technologies vs. Lloyds Banking Group | Lumen Technologies vs. St Galler Kantonalbank | Lumen Technologies vs. Cincinnati Financial Corp | Lumen Technologies vs. Synchrony Financial |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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