Correlation Between VEON and Lumen Technologies
Can any of the company-specific risk be diversified away by investing in both VEON 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 VEON and Lumen Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VEON and Lumen Technologies, you can compare the effects of market volatilities on VEON 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 VEON with a short position of Lumen Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of VEON and Lumen Technologies.
Diversification Opportunities for VEON and Lumen Technologies
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between VEON and Lumen is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding VEON and Lumen Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lumen Technologies and VEON 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 VEON 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 VEON i.e., VEON and Lumen Technologies go up and down completely randomly.
Pair Corralation between VEON and Lumen Technologies
Given the investment horizon of 90 days VEON is expected to generate 18.16 times less return on investment than Lumen Technologies. But when comparing it to its historical volatility, VEON is 2.53 times less risky than Lumen Technologies. It trades about 0.03 of its potential returns per unit of risk. Lumen Technologies is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 613.00 in Lumen Technologies on August 23, 2024 and sell it today you would earn a total of 172.00 from holding Lumen Technologies or generate 28.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
VEON vs. Lumen Technologies
Performance |
| Timeline |
| VEON |
| Lumen Technologies |
VEON and Lumen Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VEON and Lumen Technologies
The main advantage of trading using opposite VEON and Lumen Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VEON 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.| VEON vs. Telecom Argentina SA | VEON vs. Telkom Indonesia Tbk | VEON vs. PLDT Inc ADR | VEON vs. Telefonica Brasil SA |
| Lumen Technologies vs. Verizon Communications | Lumen Technologies vs. T Mobile | Lumen Technologies vs. Comcast Corp | Lumen Technologies vs. ATT Inc |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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