Correlation Between Lumen Technologies, and ON Semiconductor

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

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

Diversification Opportunities for Lumen Technologies, and ON Semiconductor

0.48

Correlation Coefficient

Lumen Technologies,  ON Semiconductor

Very weak diversification

The 3 months correlation between Lumen and O2NS34 is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Lumen Technologies, and ON Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ON Semiconductor 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 ON Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ON Semiconductor has no effect on the direction of Lumen Technologies, i.e., Lumen Technologies, and ON Semiconductor go up and down completely randomly.

Pair Corralation between Lumen Technologies, and ON Semiconductor

Assuming the 90 days trading horizon Lumen Technologies, is expected to generate 1.76 times more return on investment than ON Semiconductor. However, Lumen Technologies, is 1.76 times more volatile than ON Semiconductor. It trades about 0.0 of its potential returns per unit of risk. ON Semiconductor is currently generating about -0.07 per unit of risk. If you would invest  3,660  in Lumen Technologies, on October 26, 2024 and sell it today you would lose (257.00) from holding Lumen Technologies, or give up 7.02% of portfolio value over 90 days.

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

Lumen Technologies,  vs.  ON Semiconductor

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.

ON Semiconductor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ON Semiconductor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Lumen Technologies, and ON Semiconductor

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

The idea behind Lumen Technologies, and ON Semiconductor 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.