Correlation Between Lumen Technologies and Vodafone Group

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

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

Diversification Opportunities for Lumen Technologies and Vodafone Group

-0.42

Correlation Coefficient

Lumen Technologies  Vodafone Group

Very good diversification

The 3 months correlation between Lumen and Vodafone is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Lumen Technologies and Vodafone Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vodafone Group PLC 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 Vodafone Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vodafone Group PLC has no effect on the direction of Lumen Technologies i.e., Lumen Technologies and Vodafone Group go up and down completely randomly.

Pair Corralation between Lumen Technologies and Vodafone Group

Given the investment horizon of 90 days Lumen Technologies is expected to under-perform the Vodafone Group. In addition to that, Lumen Technologies is 2.61 times more volatile than Vodafone Group PLC. It trades about -0.1 of its total potential returns per unit of risk. Vodafone Group PLC is currently generating about 0.13 per unit of volatility. If you would invest  842.00  in Vodafone Group PLC on December 28, 2024 and sell it today you would earn a total of  103.00  from holding Vodafone Group PLC or generate 12.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Lumen Technologies  vs.  Vodafone Group PLC

Lumen Technologies

Risk-Adjusted Performance

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 weak performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Vodafone Group PLC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vodafone Group PLC are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal basic indicators, Vodafone Group exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lumen Technologies and Vodafone Group

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

The idea behind Lumen Technologies and Vodafone Group PLC 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.