Correlation Between Lumia and Tri County
Can any of the company-specific risk be diversified away by investing in both Lumia and Tri County 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 Tri County into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lumia and Tri County Financial Group, you can compare the effects of market volatilities on Lumia and Tri County 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 Tri County. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lumia and Tri County.
Diversification Opportunities for Lumia and Tri County
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lumia and Tri is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Lumia and Tri County Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tri County Financial 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 Tri County. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tri County Financial has no effect on the direction of Lumia i.e., Lumia and Tri County go up and down completely randomly.
Pair Corralation between Lumia and Tri County
Assuming the 90 days trading horizon Lumia is expected to under-perform the Tri County. In addition to that, Lumia is 12.5 times more volatile than Tri County Financial Group. It trades about -0.07 of its total potential returns per unit of risk. Tri County Financial Group is currently generating about -0.14 per unit of volatility. If you would invest 4,475 in Tri County Financial Group on October 21, 2024 and sell it today you would lose (65.00) from holding Tri County Financial Group or give up 1.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 90.48% |
| Values | Daily Returns |
Lumia vs. Tri County Financial Group
Performance |
| Timeline |
| Lumia |
| Tri County Financial |
Lumia and Tri County Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lumia and Tri County
The main advantage of trading using opposite Lumia and Tri County positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lumia position performs unexpectedly, Tri County 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 Tri County will offset losses from the drop in Tri County's long position.The idea behind Lumia and Tri County Financial 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.| Tri County vs. The Farmers Bank | Tri County vs. CCSB Financial Corp | Tri County vs. Bank of Utica | Tri County vs. Delhi Bank Corp |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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