Correlation Between Lucid and NexteGO NV
Can any of the company-specific risk be diversified away by investing in both Lucid and NexteGO NV 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 NexteGO NV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lucid Group and NexteGO NV Ordinary, you can compare the effects of market volatilities on Lucid and NexteGO NV 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 NexteGO NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lucid and NexteGO NV.
Diversification Opportunities for Lucid and NexteGO NV
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lucid and NexteGO is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Lucid Group and NexteGO NV Ordinary in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NexteGO NV Ordinary 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 NexteGO NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NexteGO NV Ordinary has no effect on the direction of Lucid i.e., Lucid and NexteGO NV go up and down completely randomly.
Pair Corralation between Lucid and NexteGO NV
Given the investment horizon of 90 days Lucid Group is expected to generate 0.14 times more return on investment than NexteGO NV. However, Lucid Group is 6.95 times less risky than NexteGO NV. It trades about -0.05 of its potential returns per unit of risk. NexteGO NV Ordinary is currently generating about -0.02 per unit of risk. If you would invest 689.00 in Lucid Group on August 26, 2024 and sell it today you would lose (479.00) from holding Lucid Group or give up 69.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 84.38% |
| Values | Daily Returns |
Lucid Group vs. NexteGO NV Ordinary
Performance |
| Timeline |
| Lucid Group |
| NexteGO NV Ordinary |
Lucid and NexteGO NV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lucid and NexteGO NV
The main advantage of trading using opposite Lucid and NexteGO NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lucid position performs unexpectedly, NexteGO NV 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 NexteGO NV will offset losses from the drop in NexteGO NV's long position.The idea behind Lucid Group and NexteGO NV Ordinary 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.| NexteGO NV vs. Nio Class A | NexteGO NV vs. Rivian Automotive | NexteGO NV vs. Lucid Group | NexteGO NV vs. Tesla 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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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