Correlation Between Lumia and Abrdn Global
Can any of the company-specific risk be diversified away by investing in both Lumia and Abrdn Global 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 Abrdn Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lumia and Abrdn Global Infrastructure, you can compare the effects of market volatilities on Lumia and Abrdn Global 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 Abrdn Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lumia and Abrdn Global.
Diversification Opportunities for Lumia and Abrdn Global
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lumia and Abrdn is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Lumia and Abrdn Global Infrastructure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abrdn Global Infrast 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 Abrdn Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abrdn Global Infrast has no effect on the direction of Lumia i.e., Lumia and Abrdn Global go up and down completely randomly.
Pair Corralation between Lumia and Abrdn Global
Assuming the 90 days trading horizon Lumia is expected to generate 61.06 times more return on investment than Abrdn Global. However, Lumia is 61.06 times more volatile than Abrdn Global Infrastructure. It trades about 0.04 of its potential returns per unit of risk. Abrdn Global Infrastructure is currently generating about -0.02 per unit of risk. If you would invest 0.00 in Lumia on November 2, 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 | Very Weak |
| Accuracy | 96.3% |
| Values | Daily Returns |
Lumia vs. Abrdn Global Infrastructure
Performance |
| Timeline |
| Lumia |
| Abrdn Global Infrast |
Lumia and Abrdn Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lumia and Abrdn Global
The main advantage of trading using opposite Lumia and Abrdn Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lumia position performs unexpectedly, Abrdn Global 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 Abrdn Global will offset losses from the drop in Abrdn Global's long position.The idea behind Lumia and Abrdn Global Infrastructure 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.| Abrdn Global vs. Mesirow Financial Small | Abrdn Global vs. John Hancock Financial | Abrdn Global vs. Icon Financial Fund | Abrdn Global vs. Vanguard Financials Index |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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