Correlation Between Lumen Technologies and Altice USA
Can any of the company-specific risk be diversified away by investing in both Lumen Technologies and Altice USA 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 Lumen Technologies and Altice USA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lumen Technologies and Altice USA, you can compare the effects of market volatilities on Lumen Technologies and Altice USA 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 Lumen Technologies with a short position of Altice USA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lumen Technologies and Altice USA.
Diversification Opportunities for Lumen Technologies and Altice USA
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lumen and Altice is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Lumen Technologies and Altice USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altice USA and Lumen Technologies 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 Lumen Technologies are associated (or correlated) with Altice USA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altice USA has no effect on the direction of Lumen Technologies i.e., Lumen Technologies and Altice USA go up and down completely randomly.
Pair Corralation between Lumen Technologies and Altice USA
Given the investment horizon of 90 days Lumen Technologies is expected to generate 1.35 times more return on investment than Altice USA. However, Lumen Technologies is 1.35 times more volatile than Altice USA. It trades about 0.04 of its potential returns per unit of risk. Altice USA is currently generating about 0.01 per unit of risk. If you would invest 551.00 in Lumen Technologies on August 23, 2024 and sell it today you would earn a total of 204.00 from holding Lumen Technologies or generate 37.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lumen Technologies vs. Altice USA
Performance |
| Timeline |
| Lumen Technologies |
| Altice USA |
Lumen Technologies and Altice USA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lumen Technologies and Altice USA
The main advantage of trading using opposite Lumen Technologies and Altice USA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lumen Technologies position performs unexpectedly, Altice USA 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 Altice USA will offset losses from the drop in Altice USA's long position.| Lumen Technologies vs. Verizon Communications | Lumen Technologies vs. T Mobile | Lumen Technologies vs. Comcast Corp | Lumen Technologies vs. ATT Inc |
| Altice USA vs. Liberty Broadband Srs | Altice USA vs. Cogent Communications Group | Altice USA vs. Charter Communications | Altice USA vs. Liberty Broadband Srs |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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