Correlation Between Sea and Lumen Technologies
Can any of the company-specific risk be diversified away by investing in both Sea and Lumen Technologies 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 Sea and Lumen Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sea and Lumen Technologies, you can compare the effects of market volatilities on Sea and Lumen Technologies 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 Sea with a short position of Lumen Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sea and Lumen Technologies.
Diversification Opportunities for Sea and Lumen Technologies
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sea and Lumen is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Sea and Lumen Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lumen Technologies and Sea 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 Sea are associated (or correlated) with Lumen Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lumen Technologies has no effect on the direction of Sea i.e., Sea and Lumen Technologies go up and down completely randomly.
Pair Corralation between Sea and Lumen Technologies
Allowing for the 90-day total investment horizon Sea is expected to generate 0.51 times more return on investment than Lumen Technologies. However, Sea is 1.94 times less risky than Lumen Technologies. It trades about 0.29 of its potential returns per unit of risk. Lumen Technologies is currently generating about 0.11 per unit of risk. If you would invest 9,599 in Sea on August 30, 2024 and sell it today you would earn a total of 1,972 from holding Sea or generate 20.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sea vs. Lumen Technologies
Performance |
| Timeline |
| Sea |
| Lumen Technologies |
Sea and Lumen Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sea and Lumen Technologies
The main advantage of trading using opposite Sea and Lumen Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sea position performs unexpectedly, Lumen Technologies 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 Lumen Technologies will offset losses from the drop in Lumen Technologies' long position.| Sea vs. Atari SA | Sea vs. Victory Square Technologies | Sea vs. Motorsport Gaming Us | Sea vs. Alpha Esports Tech |
| Lumen Technologies vs. T Mobile | Lumen Technologies vs. Comcast Corp | Lumen Technologies vs. Charter Communications | Lumen Technologies vs. Vodafone Group PLC |
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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