Correlation Between Lumentum Holdings and Daktronics
Can any of the company-specific risk be diversified away by investing in both Lumentum Holdings and Daktronics 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 Daktronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lumentum Holdings and Daktronics, you can compare the effects of market volatilities on Lumentum Holdings and Daktronics 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 Daktronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lumentum Holdings and Daktronics.
Diversification Opportunities for Lumentum Holdings and Daktronics
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lumentum and Daktronics is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Lumentum Holdings and Daktronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daktronics 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 Daktronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daktronics has no effect on the direction of Lumentum Holdings i.e., Lumentum Holdings and Daktronics go up and down completely randomly.
Pair Corralation between Lumentum Holdings and Daktronics
Given the investment horizon of 90 days Lumentum Holdings is expected to generate 1.03 times more return on investment than Daktronics. However, Lumentum Holdings is 1.03 times more volatile than Daktronics. It trades about 0.35 of its potential returns per unit of risk. Daktronics is currently generating about 0.17 per unit of risk. If you would invest 8,164 in Lumentum Holdings on June 5, 2025 and sell it today you would earn a total of 5,248 from holding Lumentum Holdings or generate 64.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lumentum Holdings vs. Daktronics
Performance |
| Timeline |
| Lumentum Holdings |
| Daktronics |
Lumentum Holdings and Daktronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lumentum Holdings and Daktronics
The main advantage of trading using opposite Lumentum Holdings and Daktronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lumentum Holdings position performs unexpectedly, Daktronics 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 Daktronics will offset losses from the drop in Daktronics' long position.| Lumentum Holdings vs. Viavi Solutions | Lumentum Holdings vs. Ciena Corp | Lumentum Holdings vs. Applied Opt | Lumentum Holdings vs. Qorvo Inc |
| Daktronics vs. Bel Fuse B | Daktronics vs. Comtech Telecommunications Corp | Daktronics vs. CTS Corporation | Daktronics vs. Digi International |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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