Correlation Between Lumia and Vanguard Mortgage
Can any of the company-specific risk be diversified away by investing in both Lumia and Vanguard Mortgage 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 Vanguard Mortgage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lumia and Vanguard Mortgage Backed Securities, you can compare the effects of market volatilities on Lumia and Vanguard Mortgage 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 Vanguard Mortgage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lumia and Vanguard Mortgage.
Diversification Opportunities for Lumia and Vanguard Mortgage
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lumia and Vanguard is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Lumia and Vanguard Mortgage Backed Secur in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Mortgage 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 Vanguard Mortgage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Mortgage has no effect on the direction of Lumia i.e., Lumia and Vanguard Mortgage go up and down completely randomly.
Pair Corralation between Lumia and Vanguard Mortgage
Assuming the 90 days trading horizon Lumia is expected to generate 418.57 times more return on investment than Vanguard Mortgage. However, Lumia is 418.57 times more volatile than Vanguard Mortgage Backed Securities. It trades about 0.14 of its potential returns per unit of risk. Vanguard Mortgage Backed Securities is currently generating about 0.0 per unit of risk. If you would invest 0.00 in Lumia on October 20, 2024 and sell it today you would earn a total of 123.00 from holding Lumia or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 93.18% |
| Values | Daily Returns |
Lumia vs. Vanguard Mortgage Backed Secur
Performance |
| Timeline |
| Lumia |
| Vanguard Mortgage |
Lumia and Vanguard Mortgage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lumia and Vanguard Mortgage
The main advantage of trading using opposite Lumia and Vanguard Mortgage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lumia position performs unexpectedly, Vanguard Mortgage 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 Vanguard Mortgage will offset losses from the drop in Vanguard Mortgage's long position.The idea behind Lumia and Vanguard Mortgage Backed Securities 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.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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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