Correlation Between Telephone and Lumen Technologies

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

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

Diversification Opportunities for Telephone and Lumen Technologies

-0.57

Correlation Coefficient

Telephone  Lumen Technologies

Excellent diversification

The 3 months correlation between Telephone and Lumen is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Telephone and Data and Lumen Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lumen Technologies and Telephone 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 Telephone and Data are associated (or correlated) with Lumen Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lumen Technologies has no effect on the direction of Telephone i.e., Telephone and Lumen Technologies go up and down completely randomly.

Pair Corralation between Telephone and Lumen Technologies

Considering the 90-day investment horizon Telephone and Data is expected to generate 0.54 times more return on investment than Lumen Technologies. However, Telephone and Data is 1.87 times less risky than Lumen Technologies. It trades about 0.11 of its potential returns per unit of risk. Lumen Technologies is currently generating about -0.09 per unit of risk. If you would invest  3,397  in Telephone and Data on December 29, 2024 and sell it today you would earn a total of  479.00  from holding Telephone and Data or generate 14.1% return on investment over 90 days.

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

Telephone and Data  vs.  Lumen Technologies

Telephone and Data

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Telephone and Data are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal fundamental indicators, Telephone unveiled solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Telephone and Lumen Technologies

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

The idea behind Telephone and Data and Lumen Technologies 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.