Correlation Between Allison Transmission and Luminar Technologies
Can any of the company-specific risk be diversified away by investing in both Allison Transmission and Luminar 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 Allison Transmission and Luminar Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Allison Transmission Holdings and Luminar Technologies, you can compare the effects of market volatilities on Allison Transmission and Luminar 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 Allison Transmission with a short position of Luminar Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allison Transmission and Luminar Technologies.
Diversification Opportunities for Allison Transmission and Luminar Technologies
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Allison and Luminar is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Allison Transmission Holdings and Luminar Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Luminar Technologies and Allison Transmission 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 Allison Transmission Holdings are associated (or correlated) with Luminar Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Luminar Technologies has no effect on the direction of Allison Transmission i.e., Allison Transmission and Luminar Technologies go up and down completely randomly.
Pair Corralation between Allison Transmission and Luminar Technologies
Given the investment horizon of 90 days Allison Transmission Holdings is expected to generate 0.28 times more return on investment than Luminar Technologies. However, Allison Transmission Holdings is 3.59 times less risky than Luminar Technologies. It trades about -0.23 of its potential returns per unit of risk. Luminar Technologies is currently generating about -0.09 per unit of risk. If you would invest 8,175 in Allison Transmission Holdings on February 4, 2024 and sell it today you would lose (769.00) from holding Allison Transmission Holdings or give up 9.41% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Allison Transmission Holdings vs. Luminar Technologies
Performance |
Timeline |
Allison Transmission |
Luminar Technologies |
Allison Transmission and Luminar Technologies Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Allison Transmission and Luminar Technologies
The main advantage of trading using opposite Allison Transmission and Luminar Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allison Transmission position performs unexpectedly, Luminar 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 Luminar Technologies will offset losses from the drop in Luminar Technologies' long position.Allison Transmission vs. Motorcar Parts of | Allison Transmission vs. Monro Muffler Brake | Allison Transmission vs. Stoneridge | Allison Transmission vs. Superior Industries International |
Luminar Technologies vs. Allison Transmission Holdings | Luminar Technologies vs. LKQ Corporation | Luminar Technologies vs. Fox Factory Holding |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
Other Complementary Tools
Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
Content Syndication Quickly integrate customizable finance content to your own investment portal | |
Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. |