Correlation Between Lumen Technologies and Shenandoah Telecommunicatio

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

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

Diversification Opportunities for Lumen Technologies and Shenandoah Telecommunicatio

0.51

Correlation Coefficient

Lumen Technologies  Shenandoah Telecommunicatio

Very weak diversification

The 3 months correlation between Lumen and Shenandoah is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Lumen Technologies and Shenandoah Telecommunications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenandoah Telecommunicatio 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 Shenandoah Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenandoah Telecommunicatio has no effect on the direction of Lumen Technologies i.e., Lumen Technologies and Shenandoah Telecommunicatio go up and down completely randomly.

Pair Corralation between Lumen Technologies and Shenandoah Telecommunicatio

Given the investment horizon of 90 days Lumen Technologies is expected to generate 1.76 times more return on investment than Shenandoah Telecommunicatio. However, Lumen Technologies is 1.76 times more volatile than Shenandoah Telecommunications Co. It trades about -0.16 of its potential returns per unit of risk. Shenandoah Telecommunications Co is currently generating about -0.39 per unit of risk. If you would invest  170.00  in Lumen Technologies on February 4, 2024 and sell it today you would lose (41.00) from holding Lumen Technologies or give up 24.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	97.73%
Values	Daily Returns

Lumen Technologies  vs.  Shenandoah Telecommunications

Lumen Technologies

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lumen Technologies are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain primary indicators, Lumen Technologies may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Shenandoah Telecommunicatio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shenandoah Telecommunications 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 technical and fundamental indicators remain very healthy which may send shares a bit higher in June 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Lumen Technologies and Shenandoah Telecommunicatio

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

The idea behind Lumen Technologies and Shenandoah Telecommunications 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.