Correlation Between Lumen Technologies and IDT
Can any of the company-specific risk be diversified away by investing in both Lumen Technologies and IDT 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 IDT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lumen Technologies and IDT Corporation, you can compare the effects of market volatilities on Lumen Technologies and IDT 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 IDT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lumen Technologies and IDT.
Diversification Opportunities for Lumen Technologies and IDT
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lumen and IDT is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Lumen Technologies and IDT Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IDT Corporation 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 IDT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IDT Corporation has no effect on the direction of Lumen Technologies i.e., Lumen Technologies and IDT go up and down completely randomly.
Pair Corralation between Lumen Technologies and IDT
Given the investment horizon of 90 days Lumen Technologies is expected to generate 3.4 times more return on investment than IDT. However, Lumen Technologies is 3.4 times more volatile than IDT Corporation. It trades about 0.04 of its potential returns per unit of risk. IDT Corporation is currently generating about 0.07 per unit of risk. If you would invest 604.00 in Lumen Technologies on September 3, 2024 and sell it today you would earn a total of 95.00 from holding Lumen Technologies or generate 15.73% 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. IDT Corp.
Performance |
| Timeline |
| Lumen Technologies |
| IDT Corporation |
Lumen Technologies and IDT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lumen Technologies and IDT
The main advantage of trading using opposite Lumen Technologies and IDT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lumen Technologies position performs unexpectedly, IDT 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 IDT will offset losses from the drop in IDT's long position.| Lumen Technologies vs. Highway Holdings Limited | Lumen Technologies vs. QCR Holdings | Lumen Technologies vs. Partner Communications | Lumen Technologies vs. Acumen Pharmaceuticals |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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