Correlation Between Lucid and Magnite
Can any of the company-specific risk be diversified away by investing in both Lucid and Magnite 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 Magnite into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lucid Group and Magnite, you can compare the effects of market volatilities on Lucid and Magnite 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 Magnite. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lucid and Magnite.
Diversification Opportunities for Lucid and Magnite
Poor diversification
The 3 months correlation between Lucid and Magnite is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Lucid Group and Magnite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magnite 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 Magnite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magnite has no effect on the direction of Lucid i.e., Lucid and Magnite go up and down completely randomly.
Pair Corralation between Lucid and Magnite
Given the investment horizon of 90 days Lucid Group is expected to generate 1.32 times more return on investment than Magnite. However, Lucid is 1.32 times more volatile than Magnite. It trades about -0.1 of its potential returns per unit of risk. Magnite is currently generating about -0.33 per unit of risk. If you would invest 278.00 in Lucid Group on December 24, 2024 and sell it today you would lose (36.00) from holding Lucid Group or give up 12.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lucid Group vs. Magnite
Performance |
| Timeline |
| Lucid Group |
| Magnite |
Lucid and Magnite Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lucid and Magnite
The main advantage of trading using opposite Lucid and Magnite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lucid position performs unexpectedly, Magnite 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 Magnite will offset losses from the drop in Magnite's long position.The idea behind Lucid Group and Magnite 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.| Magnite vs. Deluxe | Magnite vs. Clear Channel Outdoor | Magnite vs. Entravision Communications | Magnite vs. Criteo Sa |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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