Correlation Between First and Lumen Technologies
Can any of the company-specific risk be diversified away by investing in both First 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 First and Lumen Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Class Metals and Lumen Technologies, you can compare the effects of market volatilities on First 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 First with a short position of Lumen Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of First and Lumen Technologies.
Diversification Opportunities for First and Lumen Technologies
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Lumen is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding First Class Metals and Lumen Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lumen Technologies and First 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 First Class Metals 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 First i.e., First and Lumen Technologies go up and down completely randomly.
Pair Corralation between First and Lumen Technologies
Assuming the 90 days trading horizon First Class Metals is expected to generate 0.99 times more return on investment than Lumen Technologies. However, First Class Metals is 1.01 times less risky than Lumen Technologies. It trades about -0.01 of its potential returns per unit of risk. Lumen Technologies is currently generating about -0.02 per unit of risk. If you would invest 195.00 in First Class Metals on October 24, 2024 and sell it today you would lose (15.00) from holding First Class Metals or give up 7.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.39% |
| Values | Daily Returns |
First Class Metals vs. Lumen Technologies
Performance |
| Timeline |
| First Class Metals |
| Lumen Technologies |
First and Lumen Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First and Lumen Technologies
The main advantage of trading using opposite First and Lumen Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First 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.| First vs. Omega Healthcare Investors | First vs. Target Healthcare REIT | First vs. Jupiter Green Investment | First vs. Abingdon Health Plc |
| Lumen Technologies vs. Europa Metals | Lumen Technologies vs. First Class Metals | Lumen Technologies vs. Empire Metals Limited | Lumen Technologies vs. Fair Oaks Income |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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