Correlation Between TESSCO Technologies and Lumentum Holdings
Can any of the company-specific risk be diversified away by investing in both TESSCO Technologies and Lumentum Holdings 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 TESSCO Technologies and Lumentum Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TESSCO Technologies Incorporated and Lumentum Holdings, you can compare the effects of market volatilities on TESSCO Technologies and Lumentum Holdings 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 TESSCO Technologies with a short position of Lumentum Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of TESSCO Technologies and Lumentum Holdings.
Diversification Opportunities for TESSCO Technologies and Lumentum Holdings
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between TESSCO and Lumentum is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding TESSCO Technologies Incorporat and Lumentum Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lumentum Holdings and TESSCO 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 TESSCO Technologies Incorporated are associated (or correlated) with Lumentum Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lumentum Holdings has no effect on the direction of TESSCO Technologies i.e., TESSCO Technologies and Lumentum Holdings go up and down completely randomly.
Pair Corralation between TESSCO Technologies and Lumentum Holdings
If you would invest 6,496 in Lumentum Holdings on August 28, 2024 and sell it today you would earn a total of 2,202 from holding Lumentum Holdings or generate 33.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 4.55% |
| Values | Daily Returns |
TESSCO Technologies Incorporat vs. Lumentum Holdings
Performance |
| Timeline |
| TESSCO Technologies |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Lumentum Holdings |
TESSCO Technologies and Lumentum Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TESSCO Technologies and Lumentum Holdings
The main advantage of trading using opposite TESSCO Technologies and Lumentum Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TESSCO Technologies position performs unexpectedly, Lumentum Holdings 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 Lumentum Holdings will offset losses from the drop in Lumentum Holdings' long position.| TESSCO Technologies vs. Mynaric AG ADR | TESSCO Technologies vs. Knowles Cor | TESSCO Technologies vs. Comtech Telecommunications Corp | TESSCO Technologies vs. Ituran Location and |
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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