Correlation Between Lumentum Holdings and Wialan Technologies
Can any of the company-specific risk be diversified away by investing in both Lumentum Holdings and Wialan 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 Lumentum Holdings and Wialan Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lumentum Holdings and Wialan Technologies, you can compare the effects of market volatilities on Lumentum Holdings and Wialan 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 Lumentum Holdings with a short position of Wialan Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lumentum Holdings and Wialan Technologies.
Diversification Opportunities for Lumentum Holdings and Wialan Technologies
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Lumentum and Wialan is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Lumentum Holdings and Wialan Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wialan Technologies 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 Wialan Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wialan Technologies has no effect on the direction of Lumentum Holdings i.e., Lumentum Holdings and Wialan Technologies go up and down completely randomly.
Pair Corralation between Lumentum Holdings and Wialan Technologies
Given the investment horizon of 90 days Lumentum Holdings is expected to generate 2.6 times less return on investment than Wialan Technologies. But when comparing it to its historical volatility, Lumentum Holdings is 3.12 times less risky than Wialan Technologies. It trades about 0.06 of its potential returns per unit of risk. Wialan Technologies is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 0.09 in Wialan Technologies on August 31, 2024 and sell it today you would earn a total of 0.00 from holding Wialan Technologies or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lumentum Holdings vs. Wialan Technologies
Performance |
| Timeline |
| Lumentum Holdings |
| Wialan Technologies |
Lumentum Holdings and Wialan Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lumentum Holdings and Wialan Technologies
The main advantage of trading using opposite Lumentum Holdings and Wialan Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lumentum Holdings position performs unexpectedly, Wialan 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 Wialan Technologies will offset losses from the drop in Wialan Technologies' long position.| Lumentum Holdings vs. NETGEAR | Lumentum Holdings vs. KVH Industries | Lumentum Holdings vs. Telesat Corp | Lumentum Holdings vs. Juniper Networks |
| Wialan Technologies vs. Baylin Technologies | Wialan Technologies vs. Viavi Solutions | Wialan Technologies vs. SatixFy Communications | Wialan Technologies vs. Electronic Systems Technology |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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