Correlation Between Lumia and Guidemark
Can any of the company-specific risk be diversified away by investing in both Lumia and Guidemark 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 Lumia and Guidemark into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lumia and Guidemark E Fixed, you can compare the effects of market volatilities on Lumia and Guidemark 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 Lumia with a short position of Guidemark. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lumia and Guidemark.
Diversification Opportunities for Lumia and Guidemark
Very good diversification
The 3 months correlation between Lumia and Guidemark is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Lumia and Guidemark E Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guidemark E Fixed and Lumia 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 Lumia are associated (or correlated) with Guidemark. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guidemark E Fixed has no effect on the direction of Lumia i.e., Lumia and Guidemark go up and down completely randomly.
Pair Corralation between Lumia and Guidemark
Assuming the 90 days trading horizon Lumia is expected to under-perform the Guidemark. In addition to that, Lumia is 20.76 times more volatile than Guidemark E Fixed. It trades about -0.19 of its total potential returns per unit of risk. Guidemark E Fixed is currently generating about 0.05 per unit of volatility. If you would invest 808.00 in Guidemark E Fixed on October 20, 2024 and sell it today you would earn a total of 2.00 from holding Guidemark E Fixed or generate 0.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 86.36% |
| Values | Daily Returns |
Lumia vs. Guidemark E Fixed
Performance |
| Timeline |
| Lumia |
| Guidemark E Fixed |
Lumia and Guidemark Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lumia and Guidemark
The main advantage of trading using opposite Lumia and Guidemark positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lumia position performs unexpectedly, Guidemark 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 Guidemark will offset losses from the drop in Guidemark's long position.The idea behind Lumia and Guidemark E Fixed 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.| Guidemark vs. Calvert Large Cap | Guidemark vs. Fundamental Large Cap | Guidemark vs. Touchstone Large Cap | Guidemark vs. Qs Large Cap |
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 Valuation module to check real value of public entities based on technical and fundamental data.
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