Correlation Between Lumen Technologies, and Vodafone Group

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

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

Diversification Opportunities for Lumen Technologies, and Vodafone Group

-0.12

Correlation Coefficient

Lumen Technologies,  Vodafone Group

Good diversification

The 3 months correlation between Lumen and Vodafone is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Lumen Technologies, and Vodafone Group Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vodafone Group Public 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 Vodafone Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vodafone Group Public has no effect on the direction of Lumen Technologies, i.e., Lumen Technologies, and Vodafone Group go up and down completely randomly.

Pair Corralation between Lumen Technologies, and Vodafone Group

Assuming the 90 days trading horizon Lumen Technologies, is expected to under-perform the Vodafone Group. In addition to that, Lumen Technologies, is 4.13 times more volatile than Vodafone Group Public. It trades about -0.1 of its total potential returns per unit of risk. Vodafone Group Public is currently generating about -0.04 per unit of volatility. If you would invest  2,650  in Vodafone Group Public on October 5, 2024 and sell it today you would lose (33.00) from holding Vodafone Group Public or give up 1.25% of portfolio value over 90 days.

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

Lumen Technologies,  vs.  Vodafone Group Public

Lumen Technologies,

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lumen Technologies, are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak primary indicators, Lumen Technologies, may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Vodafone Group Public

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vodafone Group Public are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Vodafone Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Lumen Technologies, and Vodafone Group

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

The idea behind Lumen Technologies, and Vodafone Group Public 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.