Correlation Between Cable One and Lumen Technologies

Can any of the company-specific risk be diversified away by investing in both Cable One 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 Cable One and Lumen Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cable One and Lumen Technologies, you can compare the effects of market volatilities on Cable One 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 Cable One with a short position of Lumen Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cable One and Lumen Technologies.

Diversification Opportunities for Cable One and Lumen Technologies

0.74

Correlation Coefficient

Cable One  Lumen Technologies

Poor diversification

The 3 months correlation between Cable and Lumen is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Cable One and Lumen Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lumen Technologies and Cable One 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 Cable One 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 Cable One i.e., Cable One and Lumen Technologies go up and down completely randomly.

Pair Corralation between Cable One and Lumen Technologies

Given the investment horizon of 90 days Cable One is expected to generate 2.43 times less return on investment than Lumen Technologies. But when comparing it to its historical volatility, Cable One is 1.76 times less risky than Lumen Technologies. It trades about 0.11 of its potential returns per unit of risk. Lumen Technologies is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  471.00  in Lumen Technologies on September 3, 2024 and sell it today you would earn a total of  228.00  from holding Lumen Technologies or generate 48.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Cable One  vs.  Lumen Technologies

Cable One

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cable One are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting fundamental drivers, Cable One displayed solid returns over the last few months and may actually be approaching a breakup point.

Lumen Technologies

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lumen Technologies are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Lumen Technologies displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cable One and Lumen Technologies

The main advantage of trading using opposite Cable One and Lumen Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cable One 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.

The idea behind Cable One and Lumen Technologies pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..