Correlation Between Lumia and Ssga Sp

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

By analyzing existing cross correlation between Lumia and Ssga Sp 500, you can compare the effects of market volatilities on Lumia and Ssga Sp 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 Ssga Sp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lumia and Ssga Sp.

Diversification Opportunities for Lumia and Ssga Sp

-0.3

Correlation Coefficient

Lumia  Ssga Sp

Very good diversification

The 3 months correlation between Lumia and Ssga is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Lumia and Ssga Sp 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ssga Sp 500 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 Ssga Sp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ssga Sp 500 has no effect on the direction of Lumia i.e., Lumia and Ssga Sp go up and down completely randomly.

Pair Corralation between Lumia and Ssga Sp

Assuming the 90 days trading horizon Lumia is expected to under-perform the Ssga Sp. In addition to that, Lumia is 6.16 times more volatile than Ssga Sp 500. It trades about -0.25 of its total potential returns per unit of risk. Ssga Sp 500 is currently generating about 0.09 per unit of volatility. If you would invest  26,412  in Ssga Sp 500 on October 26, 2024 and sell it today you would earn a total of  374.00  from holding Ssga Sp 500 or generate 1.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	85.71%
Values	Daily Returns

Lumia  vs.  Ssga Sp 500

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.

Ssga Sp 500

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ssga Sp 500 has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Ssga Sp 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 Ssga Sp

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

The idea behind Lumia and Ssga Sp 500 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..