Correlation Between Lumia and Murano Global

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

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

Diversification Opportunities for Lumia and Murano Global

0.67

Correlation Coefficient

Lumia  Murano Global

Poor diversification

The 3 months correlation between Lumia and Murano is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Lumia and Murano Global Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Murano Global Investments 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 Murano Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Murano Global Investments has no effect on the direction of Lumia i.e., Lumia and Murano Global go up and down completely randomly.

Pair Corralation between Lumia and Murano Global

Assuming the 90 days trading horizon Lumia is expected to generate 3.78 times more return on investment than Murano Global. However, Lumia is 3.78 times more volatile than Murano Global Investments. It trades about 0.06 of its potential returns per unit of risk. Murano Global Investments is currently generating about 0.12 per unit of risk. If you would invest  0.00  in Lumia on October 24, 2024 and sell it today you would earn a total of  101.00  from holding Lumia or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	69.92%
Values	Daily Returns

Lumia  vs.  Murano Global Investments

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

Murano Global Investments

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Murano Global Investments are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Murano Global showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lumia and Murano Global

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

The idea behind Lumia and Murano Global Investments 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 CEOs Directory module to screen CEOs from public companies around the world.