Correlation Between Aptiv PLC and Lucid
Can any of the company-specific risk be diversified away by investing in both Aptiv PLC and Lucid 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 Aptiv PLC and Lucid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aptiv PLC and Lucid Group, you can compare the effects of market volatilities on Aptiv PLC and Lucid 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 Aptiv PLC with a short position of Lucid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aptiv PLC and Lucid.
Diversification Opportunities for Aptiv PLC and Lucid
Poor diversification
The 3 months correlation between Aptiv and Lucid is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Aptiv PLC and Lucid Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lucid Group and Aptiv PLC 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 Aptiv PLC are associated (or correlated) with Lucid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lucid Group has no effect on the direction of Aptiv PLC i.e., Aptiv PLC and Lucid go up and down completely randomly.
Pair Corralation between Aptiv PLC and Lucid
Given the investment horizon of 90 days Aptiv PLC is expected to generate 0.24 times more return on investment than Lucid. However, Aptiv PLC is 4.23 times less risky than Lucid. It trades about 0.11 of its potential returns per unit of risk. Lucid Group is currently generating about -0.13 per unit of risk. If you would invest 6,417 in Aptiv PLC on November 28, 2024 and sell it today you would earn a total of 205.00 from holding Aptiv PLC or generate 3.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aptiv PLC vs. Lucid Group
Performance |
| Timeline |
| Aptiv PLC |
| Lucid Group |
Aptiv PLC and Lucid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aptiv PLC and Lucid
The main advantage of trading using opposite Aptiv PLC and Lucid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aptiv PLC position performs unexpectedly, Lucid 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 Lucid will offset losses from the drop in Lucid's long position.| Aptiv PLC vs. Allison Transmission Holdings | Aptiv PLC vs. LKQ Corporation | Aptiv PLC vs. Lear Corporation | Aptiv PLC vs. Magna 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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