Correlation Between Lumia and OneMain Holdings
Can any of the company-specific risk be diversified away by investing in both Lumia and OneMain Holdings 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 OneMain Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lumia and OneMain Holdings, you can compare the effects of market volatilities on Lumia and OneMain Holdings 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 OneMain Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lumia and OneMain Holdings.
Diversification Opportunities for Lumia and OneMain Holdings
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Lumia and OneMain is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Lumia and OneMain Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OneMain Holdings 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 OneMain Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OneMain Holdings has no effect on the direction of Lumia i.e., Lumia and OneMain Holdings go up and down completely randomly.
Pair Corralation between Lumia and OneMain Holdings
Assuming the 90 days trading horizon Lumia is expected to under-perform the OneMain Holdings. In addition to that, Lumia is 5.39 times more volatile than OneMain Holdings. It trades about -0.14 of its total potential returns per unit of risk. OneMain Holdings is currently generating about 0.26 per unit of volatility. If you would invest 5,118 in OneMain Holdings on October 20, 2024 and sell it today you would earn a total of 357.00 from holding OneMain Holdings or generate 6.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 90.91% |
| Values | Daily Returns |
Lumia vs. OneMain Holdings
Performance |
| Timeline |
| Lumia |
| OneMain Holdings |
Lumia and OneMain Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lumia and OneMain Holdings
The main advantage of trading using opposite Lumia and OneMain Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lumia position performs unexpectedly, OneMain Holdings 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 OneMain Holdings will offset losses from the drop in OneMain Holdings' long position.The idea behind Lumia and OneMain Holdings 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.| OneMain Holdings vs. Oaktree Specialty Lending | OneMain Holdings vs. Barings BDC | OneMain Holdings vs. Runway Growth Finance | OneMain Holdings vs. Ally Financial |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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