Correlation Between Lumen Technologies and Charter Communications
Can any of the company-specific risk be diversified away by investing in both Lumen Technologies and Charter Communications 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 Charter Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lumen Technologies and Charter Communications, you can compare the effects of market volatilities on Lumen Technologies and Charter Communications 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 Charter Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lumen Technologies and Charter Communications.
Diversification Opportunities for Lumen Technologies and Charter Communications
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lumen and Charter is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Lumen Technologies and Charter Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charter Communications 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 Charter Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charter Communications has no effect on the direction of Lumen Technologies i.e., Lumen Technologies and Charter Communications go up and down completely randomly.
Pair Corralation between Lumen Technologies and Charter Communications
Given the investment horizon of 90 days Lumen Technologies is expected to generate 1.74 times more return on investment than Charter Communications. However, Lumen Technologies is 1.74 times more volatile than Charter Communications. It trades about 0.22 of its potential returns per unit of risk. Charter Communications is currently generating about 0.22 per unit of risk. If you would invest 613.00 in Lumen Technologies on August 23, 2024 and sell it today you would earn a total of 172.00 from holding Lumen Technologies or generate 28.06% 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. Charter Communications
Performance |
| Timeline |
| Lumen Technologies |
| Charter Communications |
Lumen Technologies and Charter Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lumen Technologies and Charter Communications
The main advantage of trading using opposite Lumen Technologies and Charter Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lumen Technologies position performs unexpectedly, Charter Communications 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 Charter Communications will offset losses from the drop in Charter Communications' long position.| Lumen Technologies vs. Verizon Communications | Lumen Technologies vs. T Mobile | Lumen Technologies vs. Comcast Corp | Lumen Technologies vs. ATT Inc |
| Charter Communications vs. T Mobile | Charter Communications vs. Verizon Communications | Charter Communications vs. ATT Inc | Charter Communications 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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