Correlation Between Lumia and Transamerica Flexible

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

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

Diversification Opportunities for Lumia and Transamerica Flexible

-0.8

Correlation Coefficient

Lumia  Transamerica Flexible

Pay attention - limited upside

The 3 months correlation between Lumia and Transamerica is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Lumia and Transamerica Flexible Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Flexible 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 Transamerica Flexible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Flexible has no effect on the direction of Lumia i.e., Lumia and Transamerica Flexible go up and down completely randomly.

Pair Corralation between Lumia and Transamerica Flexible

Assuming the 90 days trading horizon Lumia is expected to under-perform the Transamerica Flexible. In addition to that, Lumia is 27.22 times more volatile than Transamerica Flexible Income. It trades about -0.2 of its total potential returns per unit of risk. Transamerica Flexible Income is currently generating about 0.16 per unit of volatility. If you would invest  780.00  in Transamerica Flexible Income on December 24, 2024 and sell it today you would earn a total of  20.00  from holding Transamerica Flexible Income or generate 2.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	93.75%
Values	Daily Returns

Lumia  vs.  Transamerica Flexible Income

Lumia

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lumia has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's fundamental 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 Lumia shareholders.

Transamerica Flexible

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Transamerica Flexible Income are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Transamerica Flexible 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 Transamerica Flexible

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

The idea behind Lumia and Transamerica Flexible Income 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.