Correlation Between Lumen Technologies and America Movil

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

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

Diversification Opportunities for Lumen Technologies and America Movil

-0.52

Correlation Coefficient

Lumen Technologies  America Movil

Excellent diversification

The 3 months correlation between Lumen and America is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Lumen Technologies and America Movil SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on America Movil SAB 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 America Movil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of America Movil SAB has no effect on the direction of Lumen Technologies i.e., Lumen Technologies and America Movil go up and down completely randomly.

Pair Corralation between Lumen Technologies and America Movil

Given the investment horizon of 90 days Lumen Technologies is expected to generate 2.89 times more return on investment than America Movil. However, Lumen Technologies is 2.89 times more volatile than America Movil SAB. It trades about 0.33 of its potential returns per unit of risk. America Movil SAB is currently generating about -0.01 per unit of risk. If you would invest  517.00  in Lumen Technologies on June 30, 2024 and sell it today you would earn a total of  211.00  from holding Lumen Technologies or generate 40.81% 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.  America Movil SAB

Lumen Technologies

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Lumen Technologies are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain primary indicators, Lumen Technologies displayed solid returns over the last few months and may actually be approaching a breakup point.

America Movil SAB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days America Movil SAB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong primary indicators, America Movil is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Lumen Technologies and America Movil

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

The idea behind Lumen Technologies and America Movil SAB 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.