Correlation Between Lucid and Inchcape Plc
Can any of the company-specific risk be diversified away by investing in both Lucid and Inchcape Plc 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 Inchcape Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lucid Group and Inchcape plc, you can compare the effects of market volatilities on Lucid and Inchcape Plc 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 Inchcape Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lucid and Inchcape Plc.
Diversification Opportunities for Lucid and Inchcape Plc
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lucid and Inchcape is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Lucid Group and Inchcape plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inchcape plc 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 Inchcape Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inchcape plc has no effect on the direction of Lucid i.e., Lucid and Inchcape Plc go up and down completely randomly.
Pair Corralation between Lucid and Inchcape Plc
If you would invest 221.00 in Lucid Group on September 1, 2024 and sell it today you would lose (3.00) from holding Lucid Group or give up 1.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lucid Group vs. Inchcape plc
Performance |
| Timeline |
| Lucid Group |
| Inchcape plc |
Lucid and Inchcape Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lucid and Inchcape Plc
The main advantage of trading using opposite Lucid and Inchcape Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lucid position performs unexpectedly, Inchcape Plc 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 Inchcape Plc will offset losses from the drop in Inchcape Plc's long position.The idea behind Lucid Group and Inchcape plc 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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