Correlation Between Lumia and Professionally Managed

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

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

Diversification Opportunities for Lumia and Professionally Managed

-0.04

Correlation Coefficient

Lumia  Professionally Managed

Good diversification

The 3 months correlation between Lumia and Professionally is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Lumia and Professionally Managed Portfol in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Professionally Managed 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 Professionally Managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Professionally Managed has no effect on the direction of Lumia i.e., Lumia and Professionally Managed go up and down completely randomly.

Pair Corralation between Lumia and Professionally Managed

Assuming the 90 days trading horizon Lumia is expected to generate 293.01 times more return on investment than Professionally Managed. However, Lumia is 293.01 times more volatile than Professionally Managed Portfolios. It trades about 0.2 of its potential returns per unit of risk. Professionally Managed Portfolios is currently generating about -0.54 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  117.00  from holding Lumia or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Lumia  vs.  Professionally Managed Portfol

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.

Professionally Managed

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Lumia and Professionally Managed Portfolios 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.