Correlation Between Lumia and CI Select

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Can any of the company-specific risk be diversified away by investing in both Lumia and CI Select 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 Lumia and CI Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lumia and CI Select Global, you can compare the effects of market volatilities on Lumia and CI Select 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 Lumia with a short position of CI Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lumia and CI Select.

Diversification Opportunities for Lumia and CI Select

0.64
  Correlation Coefficient

Poor diversification

The 3 months correlation between Lumia and 0P000075PH is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Lumia and CI Select Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Select Global and Lumia 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 Lumia are associated (or correlated) with CI Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Select Global has no effect on the direction of Lumia i.e., Lumia and CI Select go up and down completely randomly.

Pair Corralation between Lumia and CI Select

Assuming the 90 days trading horizon Lumia is expected to generate 295.0 times more return on investment than CI Select. However, Lumia is 295.0 times more volatile than CI Select Global. It trades about 0.2 of its potential returns per unit of risk. CI Select Global is currently generating about -0.02 per unit of risk. If you would invest  0.00  in Lumia on October 11, 2024 and sell it today you would earn a total of  120.00  from holding Lumia or generate 9.223372036854776E16% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy81.82%
ValuesDaily Returns

Lumia  vs.  CI Select Global

 Performance 
       Timeline  
Lumia 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Lumia are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Lumia exhibited solid returns over the last few months and may actually be approaching a breakup point.
CI Select Global 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in CI Select Global are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, CI Select is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Lumia and CI Select Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Lumia and CI Select

The main advantage of trading using opposite Lumia and CI Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lumia position performs unexpectedly, CI Select 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 CI Select will offset losses from the drop in CI Select's long position.
The idea behind Lumia and CI Select Global 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..

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