Correlation Between Lumia and Hub
Can any of the company-specific risk be diversified away by investing in both Lumia and Hub 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 Hub into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lumia and Hub Group, you can compare the effects of market volatilities on Lumia and Hub 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 Hub. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lumia and Hub.
Diversification Opportunities for Lumia and Hub
Very good diversification
The 3 months correlation between Lumia and Hub is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Lumia and Hub Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hub Group 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 Hub. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hub Group has no effect on the direction of Lumia i.e., Lumia and Hub go up and down completely randomly.
Pair Corralation between Lumia and Hub
Assuming the 90 days trading horizon Lumia is expected to generate 60.2 times more return on investment than Hub. However, Lumia is 60.2 times more volatile than Hub Group. It trades about 0.12 of its potential returns per unit of risk. Hub Group is currently generating about 0.04 per unit of risk. If you would invest 0.00 in Lumia on November 1, 2024 and sell it today you would earn a total of 91.00 from holding Lumia or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 93.75% |
| Values | Daily Returns |
Lumia vs. Hub Group
Performance |
| Timeline |
| Lumia |
| Hub Group |
Lumia and Hub Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lumia and Hub
The main advantage of trading using opposite Lumia and Hub positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lumia position performs unexpectedly, Hub 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 Hub will offset losses from the drop in Hub's long position.The idea behind Lumia and Hub Group 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.| Hub vs. Landstar System | Hub vs. JB Hunt Transport | Hub vs. Expeditors International of | Hub vs. CH Robinson Worldwide |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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