Correlation Between Lumia and D R
Can any of the company-specific risk be diversified away by investing in both Lumia and D R 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 D R into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lumia and D R HORTON, you can compare the effects of market volatilities on Lumia and D R 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 D R. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lumia and D R.
Diversification Opportunities for Lumia and D R
Excellent diversification
The 3 months correlation between Lumia and HO2 is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Lumia and D R HORTON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on D R HORTON 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 D R. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of D R HORTON has no effect on the direction of Lumia i.e., Lumia and D R go up and down completely randomly.
Pair Corralation between Lumia and D R
Assuming the 90 days trading horizon Lumia is expected to generate 47.14 times more return on investment than D R. However, Lumia is 47.14 times more volatile than D R HORTON. It trades about 0.12 of its potential returns per unit of risk. D R HORTON is currently generating about -0.1 per unit of risk. If you would invest 0.00 in Lumia on October 25, 2024 and sell it today you would earn a total of 95.00 from holding Lumia or generate 9.223372036854776E16% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 93.65% |
Values | Daily Returns |
Lumia vs. D R HORTON
Performance |
Timeline |
Lumia |
D R HORTON |
Lumia and D R Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lumia and D R
The main advantage of trading using opposite Lumia and D R positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lumia position performs unexpectedly, D R 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 D R will offset losses from the drop in D R's long position.The idea behind Lumia and D R HORTON 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.D R vs. Highlight Communications AG | D R vs. Cairo Communication SpA | D R vs. Zoom Video Communications | D R vs. Mobilezone Holding AG |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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