Correlation Between Lucid and PHINIA
Can any of the company-specific risk be diversified away by investing in both Lucid and PHINIA 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 PHINIA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lucid Group and PHINIA Inc, you can compare the effects of market volatilities on Lucid and PHINIA 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 PHINIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lucid and PHINIA.
Diversification Opportunities for Lucid and PHINIA
Excellent diversification
The 3 months correlation between Lucid and PHINIA is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Lucid Group and PHINIA Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PHINIA 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 PHINIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PHINIA Inc has no effect on the direction of Lucid i.e., Lucid and PHINIA go up and down completely randomly.
Pair Corralation between Lucid and PHINIA
Given the investment horizon of 90 days Lucid Group is expected to under-perform the PHINIA. But the stock apears to be less risky and, when comparing its historical volatility, Lucid Group is 11.19 times less risky than PHINIA. The stock trades about -0.04 of its potential returns per unit of risk. The PHINIA Inc is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 3,550 in PHINIA Inc on August 31, 2024 and sell it today you would earn a total of 1,975 from holding PHINIA Inc or generate 55.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 91.62% |
| Values | Daily Returns |
Lucid Group vs. PHINIA Inc
Performance |
| Timeline |
| Lucid Group |
| PHINIA Inc |
Lucid and PHINIA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lucid and PHINIA
The main advantage of trading using opposite Lucid and PHINIA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lucid position performs unexpectedly, PHINIA 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 PHINIA will offset losses from the drop in PHINIA's long position.The idea behind Lucid Group and PHINIA 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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