Correlation Between Lumia and Federated Mdt

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

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

Diversification Opportunities for Lumia and Federated Mdt

0.01

Correlation Coefficient

Lumia  Federated Mdt

Significant diversification

The 3 months correlation between Lumia and Federated is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Lumia and Federated Mdt Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Mdt Small 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 Federated Mdt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Mdt Small has no effect on the direction of Lumia i.e., Lumia and Federated Mdt go up and down completely randomly.

Pair Corralation between Lumia and Federated Mdt

Assuming the 90 days trading horizon Lumia is expected to generate 186.93 times more return on investment than Federated Mdt. However, Lumia is 186.93 times more volatile than Federated Mdt Small. It trades about 0.21 of its potential returns per unit of risk. Federated Mdt Small is currently generating about -0.22 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 Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Lumia  vs.  Federated Mdt Small

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.

Federated Mdt Small

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Federated Mdt Small has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Federated Mdt 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 Federated Mdt

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

The idea behind Lumia and Federated Mdt Small 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.