Correlation Between Lumia and Allspring Emerging

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

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

Diversification Opportunities for Lumia and Allspring Emerging

0.54

Correlation Coefficient

Lumia  Allspring Emerging

Very weak diversification

The 3 months correlation between Lumia and Allspring is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Lumia and Allspring Emerging Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allspring Emerging Growth 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 Allspring Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allspring Emerging Growth has no effect on the direction of Lumia i.e., Lumia and Allspring Emerging go up and down completely randomly.

Pair Corralation between Lumia and Allspring Emerging

Assuming the 90 days trading horizon Lumia is expected to under-perform the Allspring Emerging. In addition to that, Lumia is 4.94 times more volatile than Allspring Emerging Growth. It trades about -0.18 of its total potential returns per unit of risk. Allspring Emerging Growth is currently generating about -0.11 per unit of volatility. If you would invest  1,246  in Allspring Emerging Growth on December 23, 2024 and sell it today you would lose (126.00) from holding Allspring Emerging Growth or give up 10.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	93.85%
Values	Daily Returns

Lumia  vs.  Allspring Emerging Growth

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.

Allspring Emerging Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Allspring Emerging Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Lumia and Allspring Emerging

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

The idea behind Lumia and Allspring Emerging Growth 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.