Correlation Between Lumentum Holdings and TPT Global

Can any of the company-specific risk be diversified away by investing in both Lumentum Holdings and TPT Global 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 Lumentum Holdings and TPT Global into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Lumentum Holdings and TPT Global Tech, you can compare the effects of market volatilities on Lumentum Holdings and TPT Global 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 Lumentum Holdings with a short position of TPT Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lumentum Holdings and TPT Global.

Diversification Opportunities for Lumentum Holdings and TPT Global

-0.7

Correlation Coefficient

Lumentum Holdings  TPT Global

Excellent diversification

The 3 months correlation between Lumentum and TPT is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Lumentum Holdings and TPT Global Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TPT Global Tech and Lumentum Holdings 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 Lumentum Holdings are associated (or correlated) with TPT Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TPT Global Tech has no effect on the direction of Lumentum Holdings i.e., Lumentum Holdings and TPT Global go up and down completely randomly.

Pair Corralation between Lumentum Holdings and TPT Global

Given the investment horizon of 90 days Lumentum Holdings is expected to under-perform the TPT Global. But the stock apears to be less risky and, when comparing its historical volatility, Lumentum Holdings is 7.64 times less risky than TPT Global. The stock trades about -0.06 of its potential returns per unit of risk. The TPT Global Tech is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  0.01  in TPT Global Tech on December 27, 2024 and sell it today you would earn a total of  0.01  from holding TPT Global Tech or generate 100.0% return on investment over 90 days.

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

Lumentum Holdings  vs.  TPT Global Tech

Lumentum Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lumentum Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

TPT Global Tech

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TPT Global Tech are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, TPT Global showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lumentum Holdings and TPT Global

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

The idea behind Lumentum Holdings and TPT Global Tech 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.