Correlation Between Lumentum Holdings and LightPath Technologies
Can any of the company-specific risk be diversified away by investing in both Lumentum Holdings and LightPath 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 Lumentum Holdings and LightPath Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lumentum Holdings and LightPath Technologies, you can compare the effects of market volatilities on Lumentum Holdings and LightPath 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 Lumentum Holdings with a short position of LightPath Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lumentum Holdings and LightPath Technologies.
Diversification Opportunities for Lumentum Holdings and LightPath Technologies
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Lumentum and LightPath is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Lumentum Holdings and LightPath Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LightPath Technologies 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 LightPath Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LightPath Technologies has no effect on the direction of Lumentum Holdings i.e., Lumentum Holdings and LightPath Technologies go up and down completely randomly.
Pair Corralation between Lumentum Holdings and LightPath Technologies
Given the investment horizon of 90 days Lumentum Holdings is expected to generate 0.56 times more return on investment than LightPath Technologies. However, Lumentum Holdings is 1.78 times less risky than LightPath Technologies. It trades about 0.37 of its potential returns per unit of risk. LightPath Technologies is currently generating about 0.18 per unit of risk. If you would invest 5,517 in Lumentum Holdings on April 23, 2025 and sell it today you would earn a total of 4,446 from holding Lumentum Holdings or generate 80.59% 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. LightPath Technologies
Performance |
| Timeline |
| Lumentum Holdings |
| LightPath Technologies |
Lumentum Holdings and LightPath Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lumentum Holdings and LightPath Technologies
The main advantage of trading using opposite Lumentum Holdings and LightPath Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lumentum Holdings position performs unexpectedly, LightPath 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 LightPath Technologies will offset losses from the drop in LightPath Technologies' long position.| Lumentum Holdings vs. Fabrinet | Lumentum Holdings vs. Kimball Electronics | Lumentum Holdings vs. Knowles Cor | Lumentum Holdings vs. Ubiquiti Networks |
| LightPath Technologies vs. Methode Electronics | LightPath Technologies vs. OSI Systems | LightPath Technologies vs. Plexus Corp | LightPath Technologies vs. CTS Corporation |
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 Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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