Correlation Between Lucid and Cars
Can any of the company-specific risk be diversified away by investing in both Lucid and Cars 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 Lucid and Cars into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lucid Group and Cars Inc, you can compare the effects of market volatilities on Lucid and Cars 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 Lucid with a short position of Cars. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lucid and Cars.
Diversification Opportunities for Lucid and Cars
Very good diversification
The 3 months correlation between Lucid and Cars is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Lucid Group and Cars Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cars Inc and Lucid 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 Lucid Group are associated (or correlated) with Cars. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cars Inc has no effect on the direction of Lucid i.e., Lucid and Cars go up and down completely randomly.
Pair Corralation between Lucid and Cars
Given the investment horizon of 90 days Lucid is expected to generate 1185.67 times less return on investment than Cars. In addition to that, Lucid is 1.53 times more volatile than Cars Inc. It trades about 0.0 of its total potential returns per unit of risk. Cars Inc is currently generating about 0.44 per unit of volatility. If you would invest 1,599 in Cars Inc on September 1, 2024 and sell it today you would earn a total of 388.00 from holding Cars Inc or generate 24.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lucid Group vs. Cars Inc
Performance |
| Timeline |
| Lucid Group |
| Cars Inc |
Lucid and Cars Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lucid and Cars
The main advantage of trading using opposite Lucid and Cars positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lucid position performs unexpectedly, Cars 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 Cars will offset losses from the drop in Cars' long position.The idea behind Lucid Group and Cars Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
Other Complementary Tools
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites |