Correlation Between Lucid and SoFi Technologies
Can any of the company-specific risk be diversified away by investing in both Lucid and SoFi Technologies 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 SoFi Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lucid Group and SoFi Technologies, you can compare the effects of market volatilities on Lucid and SoFi Technologies 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 SoFi Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lucid and SoFi Technologies.
Diversification Opportunities for Lucid and SoFi Technologies
-0.91 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Lucid and SoFi is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding Lucid Group and SoFi Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SoFi Technologies 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 SoFi Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SoFi Technologies has no effect on the direction of Lucid i.e., Lucid and SoFi Technologies go up and down completely randomly.
Pair Corralation between Lucid and SoFi Technologies
Given the investment horizon of 90 days Lucid Group is expected to under-perform the SoFi Technologies. In addition to that, Lucid is 1.26 times more volatile than SoFi Technologies. It trades about -0.04 of its total potential returns per unit of risk. SoFi Technologies is currently generating about 0.07 per unit of volatility. If you would invest 725.00 in SoFi Technologies on August 27, 2024 and sell it today you would earn a total of 835.00 from holding SoFi Technologies or generate 115.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lucid Group vs. SoFi Technologies
Performance |
| Timeline |
| Lucid Group |
| SoFi Technologies |
Lucid and SoFi Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lucid and SoFi Technologies
The main advantage of trading using opposite Lucid and SoFi Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lucid position performs unexpectedly, SoFi Technologies 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 SoFi Technologies will offset losses from the drop in SoFi Technologies' long position.The idea behind Lucid Group and SoFi Technologies 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.| SoFi Technologies vs. Upstart Holdings | SoFi Technologies vs. Affirm Holdings | SoFi Technologies vs. Lucid Group | SoFi Technologies vs. Palantir Technologies |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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