Correlation Between Lumentum Holdings and Seagate Technology
Can any of the company-specific risk be diversified away by investing in both Lumentum Holdings and Seagate 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 Seagate 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 Seagate Technology PLC, you can compare the effects of market volatilities on Lumentum Holdings and Seagate 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 Seagate Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lumentum Holdings and Seagate Technology.
Diversification Opportunities for Lumentum Holdings and Seagate Technology
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Lumentum and Seagate is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Lumentum Holdings and Seagate Technology PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seagate Technology PLC 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 Seagate Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seagate Technology PLC has no effect on the direction of Lumentum Holdings i.e., Lumentum Holdings and Seagate Technology go up and down completely randomly.
Pair Corralation between Lumentum Holdings and Seagate Technology
Given the investment horizon of 90 days Lumentum Holdings is expected to generate 1.37 times less return on investment than Seagate Technology. In addition to that, Lumentum Holdings is 1.4 times more volatile than Seagate Technology PLC. It trades about 0.1 of its total potential returns per unit of risk. Seagate Technology PLC is currently generating about 0.19 per unit of volatility. If you would invest 8,603 in Seagate Technology PLC on March 12, 2025 and sell it today you would earn a total of 4,414 from holding Seagate Technology PLC or generate 51.31% 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. Seagate Technology PLC
Performance |
| Timeline |
| Lumentum Holdings |
| Seagate Technology PLC |
Lumentum Holdings and Seagate Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lumentum Holdings and Seagate Technology
The main advantage of trading using opposite Lumentum Holdings and Seagate Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lumentum Holdings position performs unexpectedly, Seagate 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 Seagate Technology will offset losses from the drop in Seagate Technology's long position.| Lumentum Holdings vs. NETGEAR | Lumentum Holdings vs. KVH Industries | Lumentum Holdings vs. Telesat Corp | Lumentum Holdings vs. Juniper Networks |
| Seagate Technology vs. NetApp Inc | Seagate Technology vs. Dell Technologies | Seagate Technology vs. Pure Storage | Seagate Technology vs. HP Inc |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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