Correlation Between Lumen Technologies, and Alaska Air

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

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

Diversification Opportunities for Lumen Technologies, and Alaska Air

-0.59

Correlation Coefficient

Lumen Technologies,  Alaska Air

Excellent diversification

The 3 months correlation between Lumen and Alaska is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Lumen Technologies, and Alaska Air Group, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alaska Air Group, and Lumen 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 Lumen Technologies, are associated (or correlated) with Alaska Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alaska Air Group, has no effect on the direction of Lumen Technologies, i.e., Lumen Technologies, and Alaska Air go up and down completely randomly.

Pair Corralation between Lumen Technologies, and Alaska Air

Assuming the 90 days trading horizon Lumen Technologies, is expected to generate 2.63 times more return on investment than Alaska Air. However, Lumen Technologies, is 2.63 times more volatile than Alaska Air Group,. It trades about 0.07 of its potential returns per unit of risk. Alaska Air Group, is currently generating about 0.07 per unit of risk. If you would invest  999.00  in Lumen Technologies, on October 24, 2024 and sell it today you would earn a total of  2,437  from holding Lumen Technologies, or generate 243.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Lumen Technologies,  vs.  Alaska Air Group,

Lumen Technologies,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lumen Technologies, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong primary indicators, Lumen Technologies, is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Alaska Air Group,

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alaska Air Group, are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak essential indicators, Alaska Air sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lumen Technologies, and Alaska Air

The main advantage of trading using opposite Lumen Technologies, and Alaska Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lumen Technologies, position performs unexpectedly, Alaska Air 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 Alaska Air will offset losses from the drop in Alaska Air's long position.

The idea behind Lumen Technologies, and Alaska Air Group, 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.

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.