Correlation Between IDT and Lumen Technologies
Can any of the company-specific risk be diversified away by investing in both IDT 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 IDT and Lumen Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IDT Corporation and Lumen Technologies, you can compare the effects of market volatilities on IDT 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 IDT with a short position of Lumen Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of IDT and Lumen Technologies.
Diversification Opportunities for IDT and Lumen Technologies
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IDT and Lumen is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding IDT Corp. and Lumen Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lumen Technologies and IDT 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 IDT Corporation 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 IDT i.e., IDT and Lumen Technologies go up and down completely randomly.
Pair Corralation between IDT and Lumen Technologies
Considering the 90-day investment horizon IDT is expected to generate 2.22 times less return on investment than Lumen Technologies. But when comparing it to its historical volatility, IDT Corporation is 3.32 times less risky than Lumen Technologies. It trades about 0.06 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 540.00 in Lumen Technologies on August 27, 2024 and sell it today you would earn a total of 248.00 from holding Lumen Technologies or generate 45.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
IDT Corp. vs. Lumen Technologies
Performance |
| Timeline |
| IDT Corporation |
| Lumen Technologies |
IDT and Lumen Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IDT and Lumen Technologies
The main advantage of trading using opposite IDT and Lumen Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IDT 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.The idea behind IDT Corporation and Lumen Technologies pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
Other Complementary Tools
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments |