Correlation Between Lumentum Holdings and Belden
Can any of the company-specific risk be diversified away by investing in both Lumentum Holdings and Belden 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 Lumentum Holdings and Belden into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lumentum Holdings and Belden Inc, you can compare the effects of market volatilities on Lumentum Holdings and Belden 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 Lumentum Holdings with a short position of Belden. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lumentum Holdings and Belden.
Diversification Opportunities for Lumentum Holdings and Belden
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lumentum and Belden is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Lumentum Holdings and Belden Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Belden Inc and Lumentum Holdings 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 Lumentum Holdings are associated (or correlated) with Belden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Belden Inc has no effect on the direction of Lumentum Holdings i.e., Lumentum Holdings and Belden go up and down completely randomly.
Pair Corralation between Lumentum Holdings and Belden
Given the investment horizon of 90 days Lumentum Holdings is expected to generate 1.33 times more return on investment than Belden. However, Lumentum Holdings is 1.33 times more volatile than Belden Inc. It trades about 0.04 of its potential returns per unit of risk. Belden Inc is currently generating about 0.05 per unit of risk. If you would invest 6,092 in Lumentum Holdings on August 27, 2024 and sell it today you would earn a total of 2,817 from holding Lumentum Holdings or generate 46.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lumentum Holdings vs. Belden Inc
Performance |
| Timeline |
| Lumentum Holdings |
| Belden Inc |
Lumentum Holdings and Belden Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lumentum Holdings and Belden
The main advantage of trading using opposite Lumentum Holdings and Belden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lumentum Holdings position performs unexpectedly, Belden 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 Belden will offset losses from the drop in Belden's long position.| Lumentum Holdings vs. Ichor Holdings | Lumentum Holdings vs. Fabrinet | Lumentum Holdings vs. Hello Group | Lumentum Holdings vs. Ultra Clean Holdings |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Other Complementary Tools
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |