Correlation Between Lumia and Urban One
Can any of the company-specific risk be diversified away by investing in both Lumia and Urban One 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 Urban One into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lumia and Urban One, you can compare the effects of market volatilities on Lumia and Urban One 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 Urban One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lumia and Urban One.
Diversification Opportunities for Lumia and Urban One
Weak diversification
The 3 months correlation between Lumia and Urban is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Lumia and Urban One in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Urban One 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 Urban One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Urban One has no effect on the direction of Lumia i.e., Lumia and Urban One go up and down completely randomly.
Pair Corralation between Lumia and Urban One
Assuming the 90 days trading horizon Lumia is expected to under-perform the Urban One. In addition to that, Lumia is 1.57 times more volatile than Urban One. It trades about -0.33 of its total potential returns per unit of risk. Urban One is currently generating about -0.13 per unit of volatility. If you would invest 150.00 in Urban One on November 2, 2024 and sell it today you would lose (16.00) from holding Urban One or give up 10.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 90.48% |
| Values | Daily Returns |
Lumia vs. Urban One
Performance |
| Timeline |
| Lumia |
| Urban One |
Lumia and Urban One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lumia and Urban One
The main advantage of trading using opposite Lumia and Urban One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lumia position performs unexpectedly, Urban One 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 Urban One will offset losses from the drop in Urban One's long position.The idea behind Lumia and Urban One 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.| Urban One vs. TVA Group | Urban One vs. Saga Communications | Urban One vs. E W Scripps | Urban One vs. Cumulus Media Class |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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