Correlation Between Lumos Pharma and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Lumos Pharma and Dow Jones 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 Lumos Pharma and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lumos Pharma and Dow Jones Industrial, you can compare the effects of market volatilities on Lumos Pharma and Dow Jones 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 Lumos Pharma with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lumos Pharma and Dow Jones.
Diversification Opportunities for Lumos Pharma and Dow Jones
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lumos and Dow is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Lumos Pharma and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Lumos Pharma 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 Lumos Pharma are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Lumos Pharma i.e., Lumos Pharma and Dow Jones go up and down completely randomly.
Pair Corralation between Lumos Pharma and Dow Jones
Given the investment horizon of 90 days Lumos Pharma is expected to generate 6.64 times more return on investment than Dow Jones. However, Lumos Pharma is 6.64 times more volatile than Dow Jones Industrial. It trades about 0.06 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.11 per unit of risk. If you would invest 282.00 in Lumos Pharma on August 28, 2024 and sell it today you would earn a total of 148.00 from holding Lumos Pharma or generate 52.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lumos Pharma vs. Dow Jones Industrial
Performance |
| Timeline |
Lumos Pharma and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Lumos Pharma
Pair trading matchups for Lumos Pharma
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Lumos Pharma and Dow Jones
The main advantage of trading using opposite Lumos Pharma and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lumos Pharma position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Lumos Pharma vs. Shattuck Labs | Lumos Pharma vs. Eliem Therapeutics | Lumos Pharma vs. Champions Oncology | Lumos Pharma vs. Century Therapeutics |
| Dow Jones vs. CECO Environmental Corp | Dow Jones vs. Western Acquisition Ventures | Dow Jones vs. Tyson Foods | Dow Jones vs. Inflection Point Acquisition |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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