Correlation Between Lumentum Holdings and Credo Technology
Can any of the company-specific risk be diversified away by investing in both Lumentum Holdings and Credo Technology 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 Lumentum Holdings and Credo Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lumentum Holdings and Credo Technology Group, you can compare the effects of market volatilities on Lumentum Holdings and Credo Technology 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 Lumentum Holdings with a short position of Credo Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lumentum Holdings and Credo Technology.
Diversification Opportunities for Lumentum Holdings and Credo Technology
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Lumentum and Credo is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Lumentum Holdings and Credo Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Credo Technology and Lumentum Holdings 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 Lumentum Holdings are associated (or correlated) with Credo Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Credo Technology has no effect on the direction of Lumentum Holdings i.e., Lumentum Holdings and Credo Technology go up and down completely randomly.
Pair Corralation between Lumentum Holdings and Credo Technology
Given the investment horizon of 90 days Lumentum Holdings is expected to generate 1.15 times less return on investment than Credo Technology. But when comparing it to its historical volatility, Lumentum Holdings is 1.65 times less risky than Credo Technology. It trades about 0.35 of its potential returns per unit of risk. Credo Technology Group is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 7,300 in Credo Technology Group on June 5, 2025 and sell it today you would earn a total of 5,127 from holding Credo Technology Group or generate 70.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lumentum Holdings vs. Credo Technology Group
Performance |
| Timeline |
| Lumentum Holdings |
| Credo Technology |
Lumentum Holdings and Credo Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lumentum Holdings and Credo Technology
The main advantage of trading using opposite Lumentum Holdings and Credo Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lumentum Holdings position performs unexpectedly, Credo Technology 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 Credo Technology will offset losses from the drop in Credo Technology's long position.| Lumentum Holdings vs. Viavi Solutions | Lumentum Holdings vs. Ciena Corp | Lumentum Holdings vs. Applied Opt | Lumentum Holdings vs. Qorvo Inc |
| Credo Technology vs. Allegro Microsystems | Credo Technology vs. Ciena Corp | Credo Technology vs. Hewlett Packard Enterprise | Credo Technology vs. Lumentum Holdings |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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