Correlation Between Lumia and Multi Manager

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

By analyzing existing cross correlation between Lumia and Multi Manager Growth Strategies, you can compare the effects of market volatilities on Lumia and Multi Manager 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 Multi Manager. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lumia and Multi Manager.

Diversification Opportunities for Lumia and Multi Manager

-0.14

Correlation Coefficient

Lumia  Multi Manager

Good diversification

The 3 months correlation between Lumia and Multi is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Lumia and Multi Manager Growth Strategie in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Manager Growth 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 Multi Manager. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Manager Growth has no effect on the direction of Lumia i.e., Lumia and Multi Manager go up and down completely randomly.

Pair Corralation between Lumia and Multi Manager

Assuming the 90 days trading horizon Lumia is expected to generate 38.68 times more return on investment than Multi Manager. However, Lumia is 38.68 times more volatile than Multi Manager Growth Strategies. It trades about 0.04 of its potential returns per unit of risk. Multi Manager Growth Strategies is currently generating about 0.08 per unit of risk. If you would invest  0.00  in Lumia on October 12, 2024 and sell it today you would earn a total of  117.00  from holding Lumia or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.68%
Values	Daily Returns

Lumia  vs.  Multi Manager Growth Strategie

Lumia

Risk-Adjusted Performance

9 of 100

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 weak fundamental indicators, Lumia exhibited solid returns over the last few months and may actually be approaching a breakup point.

Multi Manager Growth

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Multi Manager Growth Strategies has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Multi Manager is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Lumia and Multi Manager

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

The idea behind Lumia and Multi Manager Growth Strategies 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.