Correlation Between Ubiquiti Networks and Lumentum Holdings
Can any of the company-specific risk be diversified away by investing in both Ubiquiti Networks 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 Ubiquiti Networks and Lumentum Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ubiquiti Networks and Lumentum Holdings, you can compare the effects of market volatilities on Ubiquiti Networks 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 Ubiquiti Networks with a short position of Lumentum Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ubiquiti Networks and Lumentum Holdings.
Diversification Opportunities for Ubiquiti Networks and Lumentum Holdings
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Ubiquiti and Lumentum is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Ubiquiti Networks and Lumentum Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lumentum Holdings and Ubiquiti Networks 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 Ubiquiti Networks 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 Ubiquiti Networks i.e., Ubiquiti Networks and Lumentum Holdings go up and down completely randomly.
Pair Corralation between Ubiquiti Networks and Lumentum Holdings
Allowing for the 90-day total investment horizon Ubiquiti Networks is expected to generate 1.22 times more return on investment than Lumentum Holdings. However, Ubiquiti Networks is 1.22 times more volatile than Lumentum Holdings. It trades about 0.31 of its potential returns per unit of risk. Lumentum Holdings is currently generating about 0.32 per unit of risk. If you would invest 25,322 in Ubiquiti Networks on August 24, 2024 and sell it today you would earn a total of 9,250 from holding Ubiquiti Networks or generate 36.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ubiquiti Networks vs. Lumentum Holdings
Performance |
| Timeline |
| Ubiquiti Networks |
| Lumentum Holdings |
Ubiquiti Networks and Lumentum Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ubiquiti Networks and Lumentum Holdings
The main advantage of trading using opposite Ubiquiti Networks and Lumentum Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ubiquiti Networks 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.| Ubiquiti Networks vs. Frequency Electronics | Ubiquiti Networks vs. Actelis Networks | Ubiquiti Networks vs. Optical Cable | Ubiquiti Networks vs. Lantronix |
| Lumentum Holdings vs. NETGEAR | Lumentum Holdings vs. KVH Industries | Lumentum Holdings vs. Telesat Corp | Lumentum Holdings vs. Juniper Networks |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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