Correlation Between Lucid and Joby Aviation
Can any of the company-specific risk be diversified away by investing in both Lucid and Joby Aviation 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 Joby Aviation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lucid Group and Joby Aviation, you can compare the effects of market volatilities on Lucid and Joby Aviation 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 Joby Aviation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lucid and Joby Aviation.
Diversification Opportunities for Lucid and Joby Aviation
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Lucid and Joby is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Lucid Group and Joby Aviation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Joby Aviation 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 Joby Aviation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Joby Aviation has no effect on the direction of Lucid i.e., Lucid and Joby Aviation go up and down completely randomly.
Pair Corralation between Lucid and Joby Aviation
Given the investment horizon of 90 days Lucid Group is expected to under-perform the Joby Aviation. But the stock apears to be less risky and, when comparing its historical volatility, Lucid Group is 3.58 times less risky than Joby Aviation. The stock trades about -0.16 of its potential returns per unit of risk. The Joby Aviation is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 84.00 in Joby Aviation on August 28, 2024 and sell it today you would earn a total of 114.00 from holding Joby Aviation or generate 135.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lucid Group vs. Joby Aviation
Performance |
| Timeline |
| Lucid Group |
| Joby Aviation |
Lucid and Joby Aviation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lucid and Joby Aviation
The main advantage of trading using opposite Lucid and Joby Aviation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lucid position performs unexpectedly, Joby Aviation 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 Joby Aviation will offset losses from the drop in Joby Aviation's long position.The idea behind Lucid Group and Joby Aviation 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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