Correlation Between Lumen Technologies and Globalstar

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

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

Diversification Opportunities for Lumen Technologies and Globalstar

0.14

Correlation Coefficient

Lumen Technologies  Globalstar

Average diversification

The 3 months correlation between Lumen and Globalstar is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Lumen Technologies and Globalstar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globalstar and Lumen Technologies 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 Lumen Technologies are associated (or correlated) with Globalstar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globalstar has no effect on the direction of Lumen Technologies i.e., Lumen Technologies and Globalstar go up and down completely randomly.

Pair Corralation between Lumen Technologies and Globalstar

Given the investment horizon of 90 days Lumen Technologies is expected to generate 1.61 times more return on investment than Globalstar. However, Lumen Technologies is 1.61 times more volatile than Globalstar. It trades about 0.03 of its potential returns per unit of risk. Globalstar is currently generating about 0.04 per unit of risk. If you would invest  559.00  in Lumen Technologies on October 7, 2024 and sell it today you would earn a total of  7.00  from holding Lumen Technologies or generate 1.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Lumen Technologies  vs.  Globalstar

Lumen Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lumen Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Lumen Technologies is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Globalstar

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Globalstar are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Globalstar unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lumen Technologies and Globalstar

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

The idea behind Lumen Technologies and Globalstar 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.