Correlation Between Lumentum Holdings and Viavi Solutions
Can any of the company-specific risk be diversified away by investing in both Lumentum Holdings and Viavi Solutions 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 Viavi Solutions into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lumentum Holdings and Viavi Solutions, you can compare the effects of market volatilities on Lumentum Holdings and Viavi Solutions 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 Viavi Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lumentum Holdings and Viavi Solutions.
Diversification Opportunities for Lumentum Holdings and Viavi Solutions
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lumentum and Viavi is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Lumentum Holdings and Viavi Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viavi Solutions 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 Viavi Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Viavi Solutions has no effect on the direction of Lumentum Holdings i.e., Lumentum Holdings and Viavi Solutions go up and down completely randomly.
Pair Corralation between Lumentum Holdings and Viavi Solutions
Given the investment horizon of 90 days Lumentum Holdings is expected to under-perform the Viavi Solutions. In addition to that, Lumentum Holdings is 1.22 times more volatile than Viavi Solutions. It trades about -0.12 of its total potential returns per unit of risk. Viavi Solutions is currently generating about 0.19 per unit of volatility. If you would invest 1,022 in Viavi Solutions on November 18, 2024 and sell it today you would earn a total of 193.00 from holding Viavi Solutions or generate 18.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lumentum Holdings vs. Viavi Solutions
Performance |
| Timeline |
| Lumentum Holdings |
| Viavi Solutions |
Lumentum Holdings and Viavi Solutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lumentum Holdings and Viavi Solutions
The main advantage of trading using opposite Lumentum Holdings and Viavi Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lumentum Holdings position performs unexpectedly, Viavi Solutions 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 Viavi Solutions will offset losses from the drop in Viavi Solutions' long position.| Lumentum Holdings vs. NETGEAR | Lumentum Holdings vs. KVH Industries | Lumentum Holdings vs. Telesat Corp | Lumentum Holdings vs. Juniper Networks |
| Viavi Solutions vs. Ciena Corp | Viavi Solutions vs. Infinera | Viavi Solutions vs. Applied Opt | Viavi Solutions vs. Juniper Networks |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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