Correlation Between Lumen Technologies and Vertiv Holdings

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

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

Diversification Opportunities for Lumen Technologies and Vertiv Holdings

0.71

Correlation Coefficient

Lumen Technologies  Vertiv Holdings

Poor diversification

The 3 months correlation between Lumen and Vertiv is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Lumen Technologies and Vertiv Holdings Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vertiv Holdings 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 Vertiv Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vertiv Holdings has no effect on the direction of Lumen Technologies i.e., Lumen Technologies and Vertiv Holdings go up and down completely randomly.

Pair Corralation between Lumen Technologies and Vertiv Holdings

Given the investment horizon of 90 days Lumen Technologies is expected to generate 0.69 times more return on investment than Vertiv Holdings. However, Lumen Technologies is 1.45 times less risky than Vertiv Holdings. It trades about -0.09 of its potential returns per unit of risk. Vertiv Holdings Co is currently generating about -0.08 per unit of risk. If you would invest  540.00  in Lumen Technologies on December 28, 2024 and sell it today you would lose (130.00) from holding Lumen Technologies or give up 24.07% of portfolio value over 90 days.

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

Lumen Technologies  vs.  Vertiv Holdings Co

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.

Vertiv Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vertiv Holdings Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Lumen Technologies and Vertiv Holdings

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

The idea behind Lumen Technologies and Vertiv Holdings Co 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 Transaction History module to view history of all your transactions and understand their impact on performance.